Line of credit on hand to main­tain $5.20

Dairy News Australia - - NEWS - STEPHEN COOKE

MUR­RAY GOULBURN will con­sider debt fund­ing of up to $100 m to shore up the cur­rent far­m­gate price of $5.20 kg/milk solids (MS). The co-op an­nounced its 2016–17 fi­nan­cial re­sults last month. It con­firmed it would main­tain its cur­rent open­ing price of $5.20/kg MS, say­ing on the ba­sis of its cur­rent bud­get, it be­lieves it will be able to fund this milk price out of cur­rent year earn­ings. A fi­nal price above this re­mained un­der re­view. It said any price above $5.20/kg would be sub­ject to var­i­ous fac­tors “in­clud­ing favourable move­ments in ex­change rates and dairy com­mod­ity prices over the bal­ance of the fi­nan­cial year, as well as re­tain­ing ap­pro­pri­ate lev­els of milk in­take”. MG re­ceived 2.7 bil­lion litres of milk in 2016– 17, down 21.8 per cent on the pre­vi­ous year. It es­ti­mates this year’s milk in­take to be 2b litres. CEO Ari Mervis said milk from MG sup­pli­ers yet to leave has been fac­tored into this es­ti­mate. 8 per cent of the to­tal ex­pected loss was yet to leave. MG Direc­tors will de­vi­ate from the Profit Shar­ing Mech­a­nism to the ex­tent re­quired to pay a full year price of $5.20/kg MS, by pro­vid­ing ac­cess to up to $100 mil­lion. This ef­fec­tively means a lower pay­out to share­hold­ers and unit hold­ers. How­ever, the Board has al­ready an­nounced it has sus­pended div­i­dend pay­ments. No fi­nal div­i­dend was de­clared in last month’s an­nounce­ment. MG CEO Ari Mervis said the co-op had asked its ad­vis­ers Deutsche Bank to "cor­ral" un­so­licited in­vestor in­ter­est so they can con­sider all op­tions. It was also work­ing on correction an “unfo- cused growth agenda” cre­ated by pre­vi­ous man­age­ment. It has since cut spend­ing on ad­vis­ery fees and con­sul­tants by 30 per cent.

Mur­ray Goulburn also an­nounced:

2016–17 rev­enue of $2.5b was down 10.3 per cent on the pre­vi­ous year The co-op took 35c/kg MS from in­ter­nal funds to achieve the fi­nal 2016–17 milk price of $4.95/kg MS The co-op posted a 370.8 mil­lion dol­lar loss for the 2016–17 fi­nan­cial year Its gear­ing level (the pro­por­tion of bor­rowed funds to eq­uity) is 37.7 per cent, up from 29 per cent the pre­vi­ous year

MG es­ti­mates this year's milk in­take to be 2b litres.

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