Warrnambool Cheese and Butter reports “strong” profit

Despite recording decreased profits and increased milk intake, the Warrnambool Cheese and Butter Factory (WCBF) has described its net operating profit for the last financial year as “strong”.

While the company reported a net operating profit after tax of $15.2 million, down $3.3 million or 17.8% on FY2011, this was a better result than the 20 to 30% reduction forecast in June.

“Once again, WCB has produced robust earnings for shareholders and milk suppliers in a year marked by a declining global economy and international commodity prices,” said Chairman Frank Davis.

“The company was able to mitigate the impact of declining international revenues through its customer-specific applications and plant capability upgrades to maintain comparably strong export prices,” Davis said.

The company’s sales volumes were down by 5.1%, “largely due to a strategic decision to hold higher closing inventories on the prospect of improving prices in the new financial year”, the company said.

“2012 was a year of two halves where strong prices were achieved in the first six months before declining sharply in the second,” said Managing Director David Lord.

“A deterioration in the global economy combined with a high Australian dollar and a surge in global production put downward pressure on pricing in the second half.”

WCBF claims to have maintained a competitive stance in the raw milk market by paying an average farm gate price of 41.4 cents per litre.