After a rocky couple of years Westland Milk Products is on the road to recovery but with just a $29,000 profit for the last financial year it admits it is still not "industry competitive".
The West Coast owned farmers' co-operative today posted a "break-even" profit of $29,000 before tax for the financial year to July 31.
It also announced a forecast payout range for the current season of $6.40 to $6.80 a kilo of milk solids.
The break-even profit for 2016-17 follows a $14.5 million after-tax loss the previous year. That was subsequently adjusted to $10.3 million following deferred tax.
Last year's dismal result saw shareholder discontent reach its peak and the winds of change have been blowing through the co-operative since the annual general meeting, with costs slashed to turn things around.
Westland Milk said today the latest result represents a total payout to its 342 shareholders of $338.7m, which was a net average cash payout of $5.18 a kilo.
The company released selected financial highlights in line with the current result but the full annual report is delayed until early November in line with the later annual meeting for shareholders this year.
A special general meeting will be held next Thursday for shareholders to ratify changes to the governance structure, including reducing the number of directors from 11 to eight.
Chairman Pete Morrison, of Canterbury, said the payout was effectively "a break-even" result for the Westland group at $29,000 profit before tax.
"While this is an improved result on 2015-16 when our payout was $3.88 a kilo, it is still not industry competitive.
"Shareholders expect their board and management to do much better this current financial year."
Morrison said shareholders were warned after the 2016 annual general meeting that returning the company to an industry competitive payout was not feasible in one season.
"We committed to doing so for 2017-18."
New ways of working and accountability from board, management and staff would make "a huge difference" this year, he said.
Morrison noted the effect of the change in management style across the co-operative in the past year, since the arrival of Toni Brendish as chief executive.
She had quickly established a new finance team and identified it was costing Westland more to process its 'bucket of milk' compared with other dairy companies in New Zealand.
"Since then, management has embarked on a campaign to reduce costs and improve efficiencies. The result has been the removal of many millions of dollars in costs from the business," Morrison said.
Opening retained earnings for the 2015-16 year were also adjusted, resulting in a net improvement of $1.5m to previously reported retained earnings for the group - with no change to 2015-16 operating results, payout or cash flow.
Highlights released today:
• Westland group shareholders were paid $338.7m in the 12 months to the end of July, while the cost associated with sales was $153.8m. The previous year shareholders received $264.2m, with sales costing $187.7m.
• A reduction in selling, distribution and administration costs by $11.4m to $107.8m.
• The group's total assets have increased by $12.6m to $230.6m in the past financial year.
• 699 million litres of milk from suppliers in 2016-17, represents a decrease of 44 million litres.
- Greymouth Star