Westland lifts milk payout prediction to $6.75$7.20

WESTLAND Milk Products has announced a predicted payout range of $6.75$7.20 for the new dairy season.

That would be welcomed by shareholders who were facing a payout range of $6.10$6.30 for 201718 which was a disappointing result, chairman Pete Morrison said.

Key factors in the prediction for an improved performance included improved sales and a better sales outlook.

There was a much improved performance from its infant and toddler nutrition, and UHT plans, and consumer butter had been, and Westland believed would continue to be, ‘‘a star performer’’.

Westland was starting to see some payback on the capital investments in ITN and UHT capacity of the past few years.

While it had taken longer than expected to start delivering a return, they were now adding value.

Westland’s decision to enter the New Zealand retail consumer butter market with its Westgold brand had also paid off, Mr Morrison said.

While the cooperative had produced butter for export and in large packs for commercial sale in New Zealand, it was only in August 2016 that it released the butter in consumersized packs to New Zealand supermarkets. Since then, more than two million packs had been sold.

The 201718 season result was not as competitive as the company had originally told shareholders it would be but various oneoff factors contributed, he said. These included former tropical cyclone Fehi which was estimated to have cost at least 10c per kg of milk solids.

Lyttelton Port strikes cost Westland also and, on top of cyclone disruption, meant Westland incurred higher freight costs to get products to customers on time.

The other major factor was quality issues that, while improved, were more extensive than at first thought and took longer than expected to resolve.

Westland was benefiting, he said, from finally having a complete executive leadership team.

Synlait Milk has announced an opening forecast base milk price of $7, based on milk fat prices remaining firm. Its forecast base milk price for 201718 rose from $6.50 to $6.65, reflecting an increase in dairy commodity prices. Its final milk price for the season would be confirmed alongside its annual result in September 2018.