Tatua Co-op sets 2015/6 dairy payout at $6.30/kg

Tatua has set its 2015/6 payout at $6.30/kg.

The Tatua Co-operative Dairy Company said it had set its 2015/6 payout at $6.30 a kg of milksolids, down from $7.10/kg last year, but well ahead of its far larger competitors Fonterra and Westland Milk.

Tatua, whose 113 suppliers farm in prime dairy country near Morrinsville, in the Waikato, said its operating revenue came to $281.2 million.

The company's earnings before tax came to $99.7m 2015/16. The latest
earnings figure equates to $6.41 per kilogram of milksolids, before retentions and tax.

The Tatua board also declared a pre-tax retention of 11 cents per kilogram of milksolids.

Tatua's gearing ratio - debt divided by debt plus equity- fell to 35.7 per cent from 36.6 at the end of the previous year.

The company said the New Zealand sollar had slowly appreciated through the year and that its foreign exchange hedging policies achieved an overall conversion rate of US71.35c.

Milk from Tatua's supplying shareholders came to 15.6m kilograms of milksolids, compared to 15.7m kg supplied in 2014/15.

Tatua said 2015/16 had been a challenging year, with global milk supply rising in the face of generally lacklustre demand. Benchmark milk powder prices declined for most of the year.

"Tatua was able to achieve a strong result in the face of the ongoing weak market due to its product mix of caseinate, whey protein concentrate and anhydrous milk fat remaining preferred throughout the year, and increased margins on its specialised added value businesses as a result of the low New Zealand milk price," the company said.

"Recent upturns in prices on the Global Dairy Trade auction are positive, but global milk supply can respond quickly to higher prices and the demand picture is mixed," the company said.

"Until this changes, further upward price movements for dairy commodities may be limited," it said in a statement.

Hokitika-based Westland Milk Products, New Zealand's second biggest dairy co-operative after Fonterra, this week confirmed that its final net average cash payout to suppliers for the 2015/6 season would be $3.87 per kg of milk solids.

Fonterra last week reported a 65 per cent lift in its net profit to $834m for the 2015/6 year, up from $506m in the previous year.

Fonterra's payout for 2015/6 came to $4.30/kg for the 2016 season, comprising a farmgate milk price of $3.90 per kg and a dividend of 40 cents per share.

Dairy NZ's estimate of break-even is $5.05/kg.