MILK SHAKE-UP HITS MURRAY GOULBURN

Written on the 27 April 2016

MILK SHAKE-UP HITS MURRAY GOULBURN

A PROFIT downgrade and a cut in supplier prices has led to a management shake-up at milk processor Murray Goulburn, including the resignation of Gary Helou as managing director.

Net profit for the full year is expected to be between $39 million and $42 million, down from about $63 million predicted in February. The company originally forecast profit of $89 million ahead of listing last July.

Investors in responsible entity MG Unit Trust (ASX:MGC) responded by offloading units in the trust after being locked in a trading halt since Friday.

The MG unit price plunged 34 per cent to $1.40 following this morning's trading update, well down on the high of $2.70 reached in December.

Murray Goulburn says its farmgate milk price of $5.60 per kilogram is no longer feasible, after being slugged by weak dairy commodity prices.

This has been driven by lower than anticipated sales of adult milk powder to China, which had tripled in the six months to the end of last December.

The company's distributable milk pool for FY16 is expected to be $170 million to $220 million lower as a result, leading to a revised farmgate price of $4.75 to $5 per kilogram. This includes a reduction in the price paid to suppliers.

A milk supply support package has been launched to assist supplier cashflows for the remainder of the year. A fixed price will be deducted from supplier milk payments for up to three years.

Murray Goulburn is 'very disappointed' it was unable to generate forecast milk prices and will implement a number of changes to offset challenging conditions.

"The board remains committed to its strategy of shifting MG's product mix from commodity products to higher margin, value-added and ready-to-consume dairy foods and will continue to focus on transforming MG into a first choice dairy foods company," the company says in a statement to the market.

The transition has prompted a senior management reshuffle, with Helou stepping down from the top job as well as a director of MG Unit Trust.

CFO Brad Hingle also announced his resignation following Helou's departure, but will remain with the company to assist with its full-year financial report.

Helou says Murray Goulburn would benefit under new leadership moving forward.

"During my time at MG, we have transformed the company's capabilities and capacity and in the process delivered two consecutive years of premium milk prices for Australian farmers," Helou says.

"While maintaining this price has proven to be difficult in current market conditions, I firmly believe MG has the foundations in place to support a strong and successful business in the years ahead."

Executive general manager business operations David Mallinson has been appointed as CEO in the interim until a replacement is found.

The full-year distribution is expected to be between 7.1c and 7.8c per unit.

 


Latest News

BRISBANE VFX PRODUCTION COMPANY CLEANS UP AT MAJOR INTERNATIONAL ADVERTISING AWARDS

AUSTRALIAN production company Alt.vfx has broken records in global advertising, becoming the first business to win...

CYCLONE DEBBIE FORCES MINE, RAIL AND PORT CLOSURES AS IT WREAKS HAVOC IN QUEENSLAND

COAL and gold mines in north and central Queensland are being seriously impacted as Cyclone Debbie makes landfall ...

FLYING START TO 2017 PASSENGER NUMBERS FOR GOLD COAST AIRPORT

RECORD numbers of travellers used the Gold Coast Airport (GCA) in January this year, continuing a five-year trend ...

SUNCORP SAYS IT'S 'COVERED' AGAINST FINANCIAL COST OF CYCLONE DEBBIE

INSURER Suncorp (ASX: SUN) says it is "well protected" against the financial impact of Cyclone Debbie th...

Related News

RAY OF HOPE FOR SLATER AND GORDON AS LENDERS STEP IN

EMBATTLED law firm Slater and Gordon (ASX: SGH) has announced to the ASX that it has launched confidential discussion...

SPROUTX PROVIDES THE SEED FOR AGTECH STARTUPS

AGTECH innovation fund SproutX has opened applications for its first accelerator round, backed by $10 million from...

GAS PRICES MAY FORCE BRICKWORKS TO TAKE MANUFACTURING OVERSEAS

BRICKWORKS Limited (ASX:BKW) chairman Robert Millner says soaring energy prices may force the company to turn to offs...

CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost h...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter