THE south-west’s largest company, Warrnambool Cheese and Butter Factory, has creamed the critics and posted a massive profit turnaround despite a global economic downturn and unsettling takeover bids.
WCB yesterday announced a net operating profit after tax of $8.8 million for last financial year — a $28.7 million improvement on the previous financial year when it posted its first-ever loss in the wake of an erosion supplier confidence.
Shares rose on news of the profit announcement and closed at $3.20.
Production figures rose by 7.4 per cent and are expected to continue to make inroads into new markets in the coming year.
Total milk intake of 896 million litres was 2.8 per cent below the record 2009 intake, but considering the lower farmgate milk prices was better than the 5.6 per cent decline in Victoria and 3.9 per cent decline nationally.
The company’s new managing director John Lord paid tribute to the board and his predecessor John McLean, who steered the company through a tumultuous trading period after the global crisis slashed returns and triggered a supplier exodus.
“It was an excellent result and a credit to the directors and Mr McLean to stabilise the business and deal with a whole raft of issues over 18 months,” Mr Lord said.
“Currency volatility is still a concern and there is nervousness in the market for the second half of the year.
“However, there is still good demand internationally for dairy produce which shows no signs of diminishing. We had general sales growth across the range in exports and our domestic market is going from strength to strength.”
Domestic consumer sales rose 23 per cent.
A year ago the company was in a more sombre mood when announcing a $20m loss and later fended off takeover bids from Canada’s Saputo and Murray Goulburn Co-operative. Murray Goulburn bought 10 per cent of WCB in a sharemarket raid earlier this year.
Now the 122-year-old Allansford-based company, which listed on the stock exchange only six years ago, has proved to critics what chairman Frank Davis said earlier this year was true: it had “much more growth potential”.
Yesterday Mr Davis said “WCB has utilised its market diversification, reliability of milk supply and improving international commodity prices to trade through a difficult period and record a significant turnaround in earnings.”
Directors declared a fully-franked final dividend of eight cents an ordinary share, bringing the total 2009-10 dividend to 10 cents. Total revenue of $416.3m was down 5.6 per cent on the previous year, reflecting a 12 per cent average fall in commodity prices, but sales volumes rose by 7.4 per cent. Operating costs on a per litre basis were cut by 5.5 per cent.
WCB employs between 330 and 400 equivalent full-time staff and processes a wide range of products with milk sourced from about 600 suppliers in south-east South Australia and south-west Victoria.
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