Milk processor Murray Goulburn has suffered a 29 per cent loss in milk supply, the company’s half-yearly report has revealed.
The company recorded an after-tax profit of $14million for the first half of the financial year.
The first half of 2018 had been challenging for Murray Goulburn, chief executive officer Ari Mervis said.
‘‘The inability to pay a competitive milk price has resulted in a substantial loss of milk. While management initiatives continue to address the cost base and commercial performance, the business remains exposed to competitive pressures and future refinancing requirements.’’
Mr Mervis said the step-up in milk price announced in October last year had helped in stabilising milk intake.
‘‘Successful completion of the Saputo transaction is expected to result in a favourable outcome for stakeholders, including ensuring value for shareholders and unitholders and a competitive milk price and milk collection commitment for suppliers.’’
Subject to completion of the Saputo sale, Murray Goulburn maintains a forecast farm gate milk price of $5.60/kg — a 40¢/kg increase on the underlying $5.20/kg price.
The company noted that if the Saputo sale failed to eventuate, Murray Goulburn might not be able to pay a competitive farm gate milk price.
‘‘Further losses of milk flow may trigger an impairment to Murray Goulburn’s assets that could breach banking covenants and result in potential withdrawal of creditors’ support and an increased risk to Murray Goulburn’s ability to refinance its expiring debt facilities,’’ the company said.
Murray Goulburn’s normalised after tax profit was $14.4million, compared to $9.4million in the first half of 2017. The company noted it had recorded a statutory net loss after tax of $27million, taking into account adjustments related to the proposed sale to Saputo.