Westland’s forecast payout down

Further to the previous post, Westland Milk has announced a decrease in its forecast payout:

Westland Milk Products today announced its 2012-13 season forecast to supplier-shareholders has been revised down from a budgeted $5.70 – $6.10 per kilogram of milk solids (kgMS) to $5 – $5.40 per kgMS.

Chief Executive Rod Quin says the reduction is due to international prices for dairy products being 10 to 15 per cent below expected levels.

“This is compounded by the ongoing high rate of the New Zealand dollar, at around 80cents against the US dollar, which results in fewer New Zealand dollars available for pay-out.”

With farmer shareholders on the West Coast and in Canterbury, Westland Milk Products is the biggest dairy cooperative in New Zealand next to Fonterra, processing some 600 million litres of milk a year and with an annual turnover of $525 million. Mr Quin says the reduced payout will have an impact on rural communities, with farmers bearing the brunt but, overall, dairying is still the right industry to be in and the co-operative is in good shape.

“This situation highlights the importance of our strategy of moving significant milk volumes away from the commodity markets into specialist nutritional products, which will give us better returns and greater stability. The nutritional products market is growing and we are taking advantage of that to the ultimate benefit of shareholders.”

Fonterra’s current forecast is $5.95 – $6.05 a kilo of milksolids with a milk price of $5.50 and the balance in expected dividend.

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