Tatua dairy company whips up its creamiest earnings year yet

Century-old Tatua Dairy Cooperative is the country's milk payout leader.

Dairy industry gem Tatua will pay its farmer-shareholders a bumper $12.30 per kg milksolids in cash after a record 2023 financial year.

The Waikato specialised product exporter’s earnings equated to a record $15.20/kg, enabling it to retain $43 million before tax for reinvestment in the business. Earnings the previous financial year were $12.65/kg.

Continuing its tradition as New Zealand’s dairy payout leader, the 109-year-old co-operative reported record group income of $537m, with earnings available for payout of $225m. It retained $2.90/kg, equivalent to $43m before tax to reinvest in the business.

Dairy industry big cheese Fonterra paid its 8000 shareholder-farmers $9.22/kg cash in FY23.

Tatua is owned by 101 dairy farmers.

In a statement it said revenue from its bulk ingredients business of caseinate, whey protein concentrate and anhydrous milkfat was the highest ever, supported by strong global dairy protein prices during the year. Prices had since fallen “which will result in more typical earnings over the year ahead.

“The bulk ingredients uplift coincided with combined revenue from our inherently more stable specialised nutritionals, foods and flavours businesses also reaching a new high and making a valuable contribution to overall earnings.”

The company said in deciding the level of cash payout to shareholders, it had to balance the needs of farmer businesses in an environment where costs had increased well beyond mainstream inflation, with the need for Tatua to continue to reinvest in its business while maintaining balance sheet strength.

The company processed 14.8 million kg of milk solids during the year. Wet weather and lack of sunshine had severely impacted milk supply early in the season, with peak supply down 6.6 per cent on the previous season. But the wet conditions had helped boost milk supply later in the season, which ended 1 per cent up on the 2021-2022 season.

Gearing - debt divided by debt plus equity - averaged 21.7 per cent for the year, but fell to 16 per cent at the July 31 balance date following the sale of higher-than-typical inventory levels.

The company said good progress had been made in other areas of the business, including a number of significant capital projects and initiatives.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.