Distributable surplusn of $ 4.72 c/kg milksolids

Embargoed: Not for publication or broadcast before 12 noon, 30 July 2007

Westland Milk Products has announced a distributable surplus for the 2006/2007 season of $ 4.72 c/kg milksolids.

This figure, comprising a $4.62 c/kg milksolids payout and a retention of 10 cents k/g milksolids, was well above earlier expectations and is a result with which chairman Ross Scarlett believes suppliers will be “well satisfied.”

“ At just under $200 million, this is the highest distributable surplus the company has made,” Mr Scarlett said today.” It’s a result which speaks for itself.”

In May, the company had advised a projected final payout of $4.30 c/kg milksolids. Mr Scarlett said the continuing buoyancy in international dairy markets and a strong performance by the company’s management team were the principal reasons for the higher than projected result.

He said the 10 cent retention would provide capacity for future investment initiatives or to accelerate capital projects.

The final payout figure also includes a 4 c/kg figure for colostrum, averaged across all suppliers.

Mr Scarlett said adverse weather had made the season a difficult one for Westland suppliers. Milk production across the company had increased by only 3 percent – against a compound annual growth figure in recent seasons of 8 percent.

.Mr Scarlett said the medium term outlook for dairy returns was encouraging with “seismic shifts” in market fundamentals affecting the supply/demand balance.

“And in this regard, the fact that Fonterra’s size in the international market makes it a price setter, is of huge benefit, not just to New Zealand, but by the same token, to Westland Milk Products.

He said that at this stage the company was projecting full-year returns for 2007/2008 in the range of $4.75 - $5.00 c/kg milksolids, but would review its projections as the season advanced.

“The one dark cloud remains the New Zealand dollar. Looking at the season ahead it is probably the greatest single uncertainty we face. “

ENDS

© Scoop Media