Warrnambool Cheese and Butter Factory has announced a net operating profit after tax of $8.8 million for the year ended June 30, 2010 - a $28.7m improvement on 2009.
WCB chairman Frank Davis said the company had "utilised its market diversification, reliability of milk supply and improving international commodity prices to trade through a difficult period and record a significant turnaround in earnings.”
Earnings per share at 22.1 cents were up 72.3c reflecting the improved profit performance of 2010.
Net Tangible Asset backing increased by 5.5pc to $2.51 per share.
The directors have declared a fully franked final dividend of 8c per ordinary share bringing the total dividend for 2009-10 to 10c per ordinary share, fully franked, with an ex-dividend date of September 14, 2010, and a record date of September 17, 2010, and a payment date of October 1, 2010.
The Dividend Reinvestment Plan is applicable to the payment with elections to participate to be lodged by September 17, 2010.
Operations
“This result demonstrates the underlying resilience of WCB, its reliability of milk supply, strong customer base and flexibility of operations,” said managing director David Lord.
“Once again WCB achieved record sales volumes underpinning the solid profit outcome.”
Total milk intake for 2010 was 896 million litres, a net 2.8pc fall from the 922m litre record of 2009.
This is an excellent outcome in a year where farm gate milk prices were well below those of preceding years and compares favourably against a 3.9pc decline in national milk volumes and a 5.6pc decline in Victorian milk volumes.
The strength of milk supply combined with improved milk utilisation resulted in an overall 7.4pc increase in production volumes and a 5.5pc reduction in operating costs on a c/L basis.
This significant improvement in operating volume and efficiency was achieved while winning a number of gold and silver national and State industry produce awards.
Total revenue for 2010 was $416.3m, down by 5.6pc or $24.8m on 2009.
Sales volumes were up by 7.4pc however average selling price was down by 12.1pc with dairy export prices not fully recovering from the pricing collapse in the latter half of 2009, and the Australian dollar appreciating significantly from prior year lows.
Current Initiatives
The Great Ocean Ingredients joint venture plant has completed its commissioning phase and is now operating at design capacity and quality.
High quality GOS product is now being exported to a select range of customers in South East Asia, China and the USA.
WCB has continued the development of its export and domestic markets achieving a 5.3pc growth in commodity volumes and a 23.2pc growth in domestic consumer goods volumes during 2010.
Initiatives are already under way to improve both market volumes and margins in 2011.
Outlook
The continued recovery of prices in the international market for dairy commodities is directly linked to the health of the global economy and the sustainability of its resurgence from recession and return to growth. While this recovery is tentative and further price volatility is likely WCB is of the view that on balance the outlook for international dairy trade is positive underpinned by the strength of rising demand for dairy in the developing world.
“The realisation of benefits from recent and future growth initiatives and the underlying strength of the business, positions WCB well to continue to provide positive returns to stakeholders,” Mr Lord said.
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