Murray Goulburn Co-operative has recorded a first-half-year loss of about $31.9million and has suffered a 20 per cent reduction in milk supply.
The big milk processor has also experienced a 14 per cent cut in revenue compared to the same period last year.
While the result looks disappointing on paper, new managing director Ari Mervis said the financial results were not unexpected in a particularly challenging year.
Mr Mervis said it was flagged in October last year that there would be a debt generated due to the attempt to maintain a competitive milk price.
So, he said, the financial result was broadly in line with last year.
‘‘Record rainfalls and high levels of competitor activity have reduced our milk intake, impacting revenue and our ability to fully recover fixed costs and overheads,’’ Mr Mervis said.
‘‘In addition, although the recent increases in the global prices of dairy commodities are welcome, they have not recovered in time to impact on MG’s first half sales volumes.’’
The company has blamed aggressive market competitiveness for milk supply and seasonal conditions for the big drop in milk supply.
Mr Mervis said there were about 350 suppliers who had left the co-operative since May but there were still about 2200 suppliers and his focus was on them and retaining them by obtaining the best he could for them.
He said the company was pursuing cost reductions and after last April more than 200 positions had been removed from the corporate office, generating savings about $10million to $15million in the current financial year.
When fully implemented it will create about $50-$60million of savings annually.
A company asset review is under way which Mr Mervis said was being pursued with diligence and rigour.
Mr Mervis said he was aware of speculation about the future of the Rochester factory but he said no decisions had been made.
‘‘It would be premature to draw any conclusions.’’
The outlook was more favourable with on-farm conditions and global conditions.
‘‘While there is a lag on the benefit of those commodity prices if they are more favourable and optimistic, there is a general consensus that things are looking more positive.’’
Mr Mervis will be visiting suppliers in the region during the next few weeks.
He said he wanted to rebuild trust and confidence in the company.
Murray Goulburn is forecasting a full year milk price of $4.95/kg, with the current average about $4.92.