Board members go down the Murray Goulburn ladder
On Friday 28 October, 2016, Phillip Tracy, the chairman of Murray Goulburn (MG) announced at the company’s AGM that he intends to step down from the board but hopes to remain as chairman until the company appoints a new managing director. The move follows other big changes of personnel at MG.
“Subject to the support of the board, I am prepared to remain as chair. Ï will only remain as chair for as long as is required to effect an orderly transition. This will allow for the completion of the MD recruitment process and provide the necessary time for the four new directors to get to know MG’s business,” Tracy said
Since April 2016 when the former managing director, Gary Helou, resigned on the day that the company announced sudden and retrospective milk price cuts, putting many of its farmers into unsustainable debt, the company has lost its chief financial officer and three board members.
The AGM was also told that special director, Peter Hawkins, will also leave the board in coming months.
The chairman, Mr Tracy, told the meeting that the process of selecting a new chairman is well advanced: “What I can advise is that we have received significant interest in the MD role and also have a very strong internal candidate in interim CEO, David Mallinson.”
MG offered farmers higher milk prices ahead of the AGM
Just one day before the AGM, Murray Goulburn surprised its suppliers with an announcement that it would accrue AUD $50 million of its own debt to pay farmers two price rises this season. Farmers immediately received an increase of 13 cents per kilogram of milk solids (kgms) with another 13 cent increase promised in June 2017 to “reward the continuity of supply”.
This ameliorating announcement followed a previous announcement just one week earlier that had forecast more cuts in farmer milk prices and company profits.
Yet in the space of just seven days, MG’s closing price, which fell from AUD $4.88 kgms to AUD $4.70 on the previous announcement, rebounded to AUD $4.95.
Backtracking to stop farmers abandoning Murray Goulburn
Having initially forecast an after tax profit of AUD $42 million, a statement by the chairman Phillip Tracy said that the profit would “now be lower given revised expectations for milk intake.”
As farmers left the co-op, the remaining suppliers were left facing the burden of having to pay back even more money to Murray Goulburn.
But in the pre-AGM statement MG advised that that would no longer be the case – the company would accrue an additional AUD $30 million of company debt to cover the milk supply extra cost created by farmers leaving Murray Goulburn.