Second Murray Goulburn director resigns after downtrade

Murray Goulburn is Australia's biggest dairy company. Photo / Leanne Pickett

Another Murray Goulburn director has resigned following the Australian dairy co-operative's disclosure last week that its earnings would fall well short of prospectus forecasts in the current financial year.

Murray Goulburn - Australia's biggest dairy foods company - said supplier-director Max Jelbart had announced his resignation from the board due to ill health.

Jelbart is a dairy farmer from Leongatha South, in Victoria, and was first elected to the board of Murray Goulburn in 2012. He was re-elected as a supplier director for a further three year term in 2015.

His departure follows the resignation last week of managing director Gary Helou, and chief financial officer Brad Hingle.

The company - which competes head-to-head with Fonterra across the Tasman - said last week that the impact of low world dairy prices had forced the company to lodge its second major earnings downgrade in two months.

Murray Goulburn said its farm-gate milk price of A$5.60 per kg of milksolids was no longer achievable. It now expects a price of A$4.75 to A$5/kg to be paid this year.

In February, the company, which listed its units on the ASX last July, forecast its annual net profit would come in at A$63 million against a prospectus forecast of A$89 million.

In last week's statement to the ASX, Murray Goulburn said it expected its net profit to fall to A$39 million to A$42 million.

The company said it would introduce a milk supply package equating to A$5.47 a kg to protect its long-term milk supply in 2016. Units in Murray Goulburn have fallen by 89 cents or 42 per cent, to A$1.25 in response to the profit downgrade.

The co-operative is the key milk-price setter in Australia.

Fonterra - the second biggest dairy company across the Tasman - warned its Australian suppliers throughout the season about the sustainability of the Australian milk price and advised them to budget conservatively.