Milk price to strengthen

By Country News on January 20, 2016

Murray Goulburn Co-operative is hoping a milk price of $6.05 is achievable for the current year if certain conditions are met, managing director Gary Helou has suggested.

Speaking at the annual general meeting in October, Mr Helou said the forecast for the southern milk region could be achieved provided dairy commodity prices continue to materially strengthen during the balance of this financial year.

However, he said if the company’s expectations do not materialise, the price is likely to be in the range of $5.60 to $5.90/kg milk solids.

‘‘MG continues to believe in the solid long-term growth prospects and fundamentals of the dairy industry,” Mr Helou said.

 ‘‘We are confident that a global supply response is emerging as a result of the low dairy commodity price environment and starting to have an impact on prices. 

“We believe dairy commodity prices have bottomed and will trend higher over the financial year.

“Since August prices have risen by around 60 per cent.’’

Mr Helou said the company had secured access to a large parcel of high reliability water, which will be sub-leased to suppliers in the northern Victorian and southern NSW regions. 

‘‘Already we are seeing strong interest in the offer and we will continue to look for further opportunities to secure high reliability water on behalf of our MG suppliers,” he said.

The company is also offering its suppliers medium and short-term finance for water purchases.

At the meeting, Murray Goulburn chairman Philip Tracy said the last financial year had been an historic one for the co-operative following the successful implementation of the capital structure and listing of the MG Unit Trust on the Australian Securities Exchange.

‘‘After 65 years as a co-op, in 2015, MG entered a new era and invited external investors to invest in the MG Unit Trust and share in our future success,” Mr Tracey said.

“The successful implementation of the capital structure was the culmination of a two-year journey to develop and implement a structure that gives MG the strong and stable capital base it needs to pursue growth and maximise the distributable milk pool in the years ahead.

‘‘MG now has on its balance sheet $500 million in new capital to invest in key strategic projects to support the delivery of world leading manufacturing and supply chain capabilities, supporting the business to better connect with and serve the increasingly sophisticated demands of global customers and consumers for premium ready-to-consume dairy foods.” 

Murray Goulburn statistics (2014-2015)

Milk intake: up 5.5%

Final 2014-15 milk price: $6.02/kg milk solids

Revenue: $2.87 billion

Capital projects spending: $126 million

Capital structure raising: $500 million

Net profit after tax: $21.2 million

By Country News on January 20, 2016

Dummy text