WARRNAMBOOL Cheese and Butter (WCB) Factory has announced a drop in profit to $7.5 million for the past financial year, with its chairman also retiring from today.
The $7.5 million net operating profit after tax was a drop of $7.7 million, or a 50.7 per cent reduction on the company's 2011-2012 profit..
WCB chairman Frank Davis said that 2012-2013 had "been a difficult and disappointing year with results adversely impacted by flat international prices, a persistently high Australian dollar and high raw milk cost relative to market conditions."
Mr Davis also announced he would retire as chairman and a director from today, with deputy chairman Terry Richardson stepping into the role.
Mr Richardson joined the board in 2007 as a supplier director and was appointed deputy chairman in May 2009.
Mr Davis joined the board as an independent director in 2000 and took on the role of chairman in May 2009 at a difficult time for the company.
The board today paid tribute to Mr Davis, saying he "has made an outstanding contribution to the success and stability of the company and has worked with diligence and drive to improve the performance of the business to the benefit of staff, shareholders and suppliers".
The company's total revenue was $496.5 million, down 0.3 per cent, or $1.2 million, on 2011-2012.
Milk intake during 2012-2013 was 890 million litres, down a a net 3.1 per cent on 2011-2012.
However the company said its balance sheet was solid and its gearing, net debt to net debt plus equity, was "comfortable" at 31.8 per cent.
It declared a fully franked final dividend of 11 cents per ordinary share with a record date of September 9, 2013, and a payment date of September 27, 2013.
It also declared its first step up in milk price to suppliers for the 2013-2014 season, announcing an increase of eight cents per kilogram for butterfat and 20 cents per kilogram for protein.
The company said it had undertaken a number of strategic steps to maintain its long term revenue base and mitigate against ongoing deterioration in international commodity revenues.
"A late surge in international powder prices and the depreciation of the Australian dollar was insufficient to wholly compensate for the depressed trading conditions and outcomes that prevailed for the majority of FY2013," Mr Davis said.
Working capital debt increased temporarily as WCB took advantage of the improved powder prices and lower exchange rates late in the year.
On the outlook for 2013-2014, the company said it had experienced a strong resurgence in international pricing and was contracting sales at average prices significantly higher than those of the 2012-2013 average.
The substantial weakening of the Australian dollar had also provided a welcome margin lift across the export product group, WCB said.
Numerous WCB business improvement projects and initiatives were also contributing to an improving product mix, higher margins and less volatility relative to commodity products, the company said.
"These factors provide a positive outlook for the international markets over the first half of this financial year and for WCB's operations in general," WCB said.