Murray Goulburn takes home $40 million net profit despite farmer crisis

Posted by AFN Staff Writers on 24th August 2016

Murray Goulburn dairy co-operative, owner of the Devondale brand, has achieved a net profit after tax of $40.6 million despite a tough year for the co-operative.

The group achieved revenue of AUD $2.8 billion, down 3.3 per cent when compared with its 2015 financial year results.

Interim Chief Executive Officer of Murray Goulburn (MG), David Mallison, said the 2016 financial year had been a challenging one for the co-operative.

“We faced environment comprised of very challenging macro settings, including sustained low commodity prices, a volatile Australian dollar, changes in Chinese regulations, and difficult seasonal conditions across many of our key regions,” Mallison said.

“This has placed our suppliers and Australian dairy farmers generally in a very difficult environment. The Board, MG’s management team, and I personally have also acknowledged to all our key stakeholders that MG’s farmgate milk price (FMP) downgrade so late in the year added to the challenge of FY16. Today we reported a final FMP for FY16 of $4.80 per kgms – in line with our April revised earnings guidance,” he stated.

Dairy Foods

MG said its dairy foods division was continuing to perform strongly.

“Revenue from the segment grew 17.2 percent from $1.1 billion to $1.3 billion in FY16 with Dairy Foods the principal contributor to group profit, generating segment contribution of $164.5 million. This reflects the robust premiums this segment can deliver above commodity prices in the current environment,” MG reported.

Ingredients and Nutritionals

In terms of MG’s ingredients business, this division was heavily impacted by the low commodity prices experienced throughout the financial year.

“Segment revenue of $1,093 million reduced 18.5 percent from the prior year. MG’s ingredients sales fell 26 percent, driven by reductions across global commodity prices,” MG stated.

“MG’s Nutritionals business provided some offset to the performance of Ingredients, with revenue growing 50 percent in the year, driven by strong demand from B2B customers for Australian sourced nutritional products,” MG said.