Packaged milk supplier Murray Goulburn's latest financial results reveal a 20.9 per cent growth to $132 million of its international dairy foods revenue, mainly driven by the new consumer packaging it launched in China and Vietnam.
During the year, Murray Goulburn invested in a number of packaging and product formulation innovations in these countries to support ongoing growth. These included a new, premium ‘metallic’ Devondale consumer packaging for UHT milk, which was particularly well received in China. The company is seeking to secure its position as among the top three imported milk brands there.
Overall, the company saw a $21.2 million annual net profit after tax, and is confident it will maintain milk prices for suppliers despite big drops in the global milk price.
For the financial year ending June 2015, the company reported a revenue of $2.87 billion, down 1.5 per cent on the previous year, and statutory net profit after tax of $21.2 million, slightly higher than expected.
CEO Gary Helou told ABC Rural he was concerned by the drop-off in the global milk price, but believes his company will not have to drop milk prices to suppliers as a consequence.
"This good result has been brought about by the strategy of shifting away from the things we can't control, which is volatile dairy commodities,” he said.
“Instead, we are focusing on value-added consumer and nutritional products. Today, only 30 per cent of our sales are in these volatile commodities. We think that prices have bottomed out. They are at historic lows and we think the market is responding at the moment. There is a contraction in supply in the big exporting regions."
Murray Goulburn said it had benefited from a more favourable exchange rate than forecast.
This, combined with "initiatives we are taking to mitigate the impact of lower commodity prices", led the co-op to believe it should not have to drop prices for suppliers.
The company does, however, go on to note that if commodity prices do not strengthen, combined with foreign currency exchange rates and other risk factors, the Southern Milk Region FMP could end up in the range of $5.60-$5.90 per kilogram.
Helou said that Murray Goulburn was not actively chasing the supply of more milk at the moment, as some sectors of the business were at capacity.
"We're not turning away suppliers. We're just taking down their details, and we'll be maintaining contact with them as we build the additional capacity that we talked about earlier, the consumer cheese, UHT and other things," he said.
"At the moment, our dairy foods facilities, that's the value-added products, are flat-chat maximised, so we can't really fit additional supply into those."
Helou said more equipment due to come online next year would allow Murray Goulburn to take on more suppliers.
