Big losses announced by Murray Goulburn
Murray Goulburn, has posted a loss of AUD $31.9 million got its first half results.
Murray Goulburn’s new Chief Executive Officer, Ari Mervis, said the financial period was a particularly challenging time for Murray Goulburn.
“Record rainfalls and high levels of competitor activity have reduced our milk intake, impacting revenue and our ability to fully recover fixed costs and overheads,” Mervis said.
“In addition, although the recent increases in the global prices of dairy commodities are welcome, they have not recovered in time to impact on MG’s first half sales volume,” Mervis stated.
“I am pleased with progress on cost and working capital initiatives, which remain a priority. The release of cash from working capital and continued improvement in cost efficiencies will be a key focus in the second half of this financial year,” Mervis said.
Dairy foods division
Revenue from Murray Goulburn’s (MG) Dairy Foods segment fell 19.7 per cent to AUD $558 million.
MG said that lower cross-border sales had a significant impact on the Dairy Foods division as the channel stabilised after a peak in the first half of the 2016 financial year.
In domestic prices the low commodity prices impacted contracts but MG said these contracts are expected to benefit from rising commodity prices in the second half of the year. A decision was made to also stop producing some low returning bulk products.
Ingredients and nutritionals divisions
The low commodity prices also impacted MG’s ingredients business during the early months of the financial period.
Segment revenue of AUD $481 million reduced by 7 per cent on the first half of the 2016 financial year.
MG’s ingredients sales fell 9.1 per cent but its nutritionals business was broadly in line with what was achieved in the first half of the 2016 financial year.
MG said a number of factors gives the business confidence for the outlook beyond the 2017 financial year.
“Improved seasonal conditions, current commodity pricing and the realisation of planned cost reduction initiatives indicate improved milk prices for suppliers. In addition, any production growth has the potential to provide further manufacturing efficiency gains,” MG reported.
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