Westland Milk is back in the black

Westland Milk Products has turned around last year’s loss as the co-operative battles to become competitive and retain farmers.

It has posted a net profit of $1.5 million - aided by a tax break - for the 2016-17 financial year, compared with a $10.3m loss the year before. The before-tax profit was $29,000.

Westland confirmed an end-ofseason payout to farmers of $5.18 per kilogram of milksolids and a prediction of between $6.40 to $6.80 for this season.

Chairman Pete Morrison credited the recovery to new chief executive Toni Brendish who had identified that it was costing Westland more to process its ‘‘bucket of milk’’ compared with other dairy companies. It had already saved about $68 million and had increased sales.

West Coast Tasman MPDamien O’Connor welcomed the news, saying it was good for the local economy.

The co-op is the largest business on the West Coast.

‘‘West Coast farmers have been looking into a gloomy tunnel so this should reassure bank managers the co-op is back on track. But it will have to remain vigilant as the battle for milk hots up between dairy companies,’’ O’Connor said.

‘‘While this is an improved result on 2015-16 when our payout was $3.88/kg, it is still not industry competitive,’’ Morrison said. ‘‘Shareholders expect their board and management to do much better this current financial year.’’

Westland’s final payout this season of $5.18/kg compares with Fonterra’s $6.52 (including a 40c dividend) and Synlait’s $6.30 (including a 14c dividend).

Hari Hari farmer Jon Sullivan said there was still a wide gap between Westland and the other companies, to whom farmers could possibly switch to.

However, Fonterra had indicated parts of the West Coast were too distant for milk collection.

‘‘We are still more than a dollar behind, and that’s cost farmers a hell of a lot. Banks have been putting the squeeze on.’’

‘‘I’m going to see how they go. I hope they can close the gap this season, I’m going to give them the benefit of the doubt,’’ Sullivan said.

Some farmers have notified Westland they want to leave, but they are able to withdraw their applications, and may do so in light of the improved result.

Westland’s debt remains largely the same at $233m, reflecting recent years’ capital expenditure programme on infrastructure such as a UHT plant.

It revised the $14.5m after-tax loss reported for the 2015-16 season. An adjustment to deferred tax for that year reduced the previously reported loss to $10.3m.