Milk sup­ply down but prof­its up

Shepparton News - Country News - - NEWS -

Tatura Milk dou­bled its af­ter­tax profit in the first half of this fi­nan­cial year as a re­sult of its nu­tri­tional and in­gre­di­ents busi­ness.

Tatura Milk op­er­ates as a sub­sidiary of Bega Cheese which an­nounced a half-year profit of $15.7 mil­lion.

Bega an­nounced Tatura Milk had recorded a $12.5 mil­lion profit, com­pared to $5.5 mil­lion in the first half of the year.

This trans­lates to a 128 per cent in­crease.

How­ever, milk sup­ply from sup­pli­ers de­creased by about nine per cent to 179 mil­lion litres which the com­pany blamed on ab­nor­mally wet seasonal con­di­tions.

Bega Cheese rev­enue in­creased by 10.6 per cent to $621 mil­lion.

The com­pany said growth in Bega Cheese’s own-brand busi­ness, an im­prove­ment in global dairy com­mod­ity prices and in­creased first-half sales in the nu­tri­tional busi­ness all con­trib­uted to the rev­enue and profit im­prove­ment.

Bega Cheese ex­ec­u­tive chair­man Barry Irvin said the highly com­pet­i­tive en­vi­ron­ment and changes in mar­kets and sup­ply chan­nels was some­thing they were used to manag­ing.

‘‘Our strat­egy has al­ways been to have a bal­anced busi­ness which as­sists us in deal­ing with volatil­ity in ei­ther the Aus­tralian or global mar­ket,’’ Mr Irvin said.

Bega en­tered into a promis­ing part­ner­ship with noted health com­pany Black­mores early last year, but that re­la­tion­ship is now un­der re­view.

The com­pany has noted that do­mes­tic and in­ter­na­tional in­fant for­mula mar­kets have ex­pe­ri­enced ma­jor dis­rup­tion since April 2016, largely as a re­sult of the Chi­nese au­thor­i­ties an­nounc­ing changes to reg­u­la­tions re­lat­ing to sell­ing and mar­ket­ing in­fant for­mula in China from Jan­uary 2018.

‘‘The Be­more busi­ness was ad­versely im­pacted by this dis­rup­tion in first half 2017,’’ the com­pany stated, and that the sit­u­a­tion was ex­pected to con­tinue into the sec­ond half of the fi­nan­cial year,’’ Mr Irvin said.

‘‘As a re­sult, Bega Cheese and Black­mores are re­view­ing the op­er­a­tions of the Be­more part­ner­ship and the dy­nam­ics of the mar­kets in which it op­er­ates.’’

He said the long-term down­ward trend in global dairy com­mod­ity prices was show­ing strong signs of cor­rect­ing at the same time as the in­fant for­mula mar­ket had be­come more volatile.

While pleased with a strong first half re­sult, Mr Irvin said he ex­pected the sec­ond half to be more chal­leng­ing.

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