Warrnambool Cheese and Butter Factory issues profit warning
After a record 2008 year, The Warrnambool Cheese and Butter Factory are predicting a decline in 2009 earnings.
Substantial slumps in world dairy prices over recent months have been the main contributor to the WCB’s pessimistic outlook. Cheddar prices have fallen as much as 35-40%, with skim milk powder and butter at 40-45% and 35-40%. These changing commodity prices reflect a stark contrast to the record high commodity pricesexperienced throughout the 2008 financial year.
WCB’s successful 2008 year was capped off with the announcement of a joint venture with National Foods in August, which will see the company taking a share in the Dairy Farmer acquisition. A deal WCB suggests will be finished in latter part of this month. Neil Kearney, WCB CEO believes that the diversifying of their business in 2009 will lead to increased stability in the volatile market.“Changes in world dairy prices will continue to impact our existing commodity business from year-to-year. However, the joint venture with National Foods and WCB’s other initiatives, such as Great Ocean Ingredients and WCB Japan, will increase the scale and diversity of our business. Together, these are likely tolead to a sustainable increase in WCB’s financial performance and decrease the historic volatility associated with our business.”The WCB are also predicting a reduction in the milk prices paid to dairy farmers in the beginning of next year, as a response to falling commodity prices.