Westland Milk has reported its second strong annual result. Photo / Supplied
Westland Milk has reported its second strong annual result. Photo / Supplied
Westland Milk Products notched up its second strong annual result in a row with a 43.7 per cent lift in net profit to $55.9 million in 2023.
The profit was more than double a targeted $20m annual return, said Westland, which is owned by Chinese dairy giant Yili.
It wasalso above 2022′s $38.9m record-breaking result, and a $120m rebound from 2021.
Chief executive Richard Wyeth said the company would keep its push towards long-term profitability by continuing to divert more milksolids into higher-value products this year.
Westland recently committed to pay farmers the 10¢ premium above Fonterra’s farmgate milk price for the 2024-25 and 2025-26 seasons, extending and improving on payment terms made under the original scheme of arrangement when the company was purchased.
“We’re proud of this result, but we know we still have plenty of room for improvement,”’ Wyeth said.
“We’re tracking well to deliver on our five-year commitment to build sustainable growth year on year. A sustainable financial base means we can continue to offer farmers very competitive terms for their milk.’’
Wyeth said revenue of $1.065 billion was slightly above last year’s result and was pleasing, given the fall in global dairy prices.
“The advantage we have of course is the backing of one of the world’s largest dairy companies in Yili,’’ Wyeth said.
“Yili’s support has enabled us to invest heavily in infrastructure that will maximise revenue from high-margin products. But our ability to remain competitive on milk prices must rely on our ability to stand alone on financial performance,” he said.
A $70m investment in a new lactoferrin plant at the company’s Hokitika plant — supported by Yili — is expected to continue to reduce reliance on traditional high-margin revenue sources such as infant formula for China, as import demand in that sector continues to soften.
Commercial production at Hokitika is expected by the final quarter this year.
Westland Milk CEO Richard Wyeth. Photo / NZME
Wyeth said a $40m investment in a new butter plant at Hokitika in 2022 had allowed the company to expand strongly in the US market.
Westgold butter is now stocked in more than 3000 grocery retail outlets in the US, including Walmart stores.
Westland also produces Kirkland Signature New Zealand Grass-Fed Butter for US retail giant Costco.
Costco’s 2022-23 financial results said Kirkland butter sales increased more than 160 per cent year on year and continued to show strong growth.
The Westland-produced butter was now stocked in almost every Costco store in the United States, as well as Costco global stores that include Korea, Taiwan and New Zealand, with more international regions in the pipeline, Wyeth said.
Yili bought the once-troubled co-operative for $588m in 2019.
At the time, Yili said Westland Milk would form part of its “dairy silk road”.
Shareholder farmers in the former co-op have received a cash payment of $3.41 a share, a 10-year guaranteed competitive milk payout, plus guarantees that all milk would be collected.
Jamie Gray is an Auckland-based journalist covering the financial markets and the primary sector. He joined the Herald in 2011.
