Canada backs down in dairy dispute
A long running trade dispute between New Zealand and Canada over dairy access has been resolved.
The company, owned by Saputo, blames the profit decline on lower global dairy prices and a high raw milk cost relative to market returns.
For year ending March 31 2016, WCB's net profit after tax was A$4.2 million, compared to A$35m for the nine months ending March 31, 2015. Saputo bought WCB in 2014.
WCB's revenue for the 12 months reached A$653m, up A$200m over the previous year. But earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by A$32.3m (56.6%) to A$24.8m.
On May 25, 2015 WCB completed its takeover of the everyday cheese business of LionDairy & Drinks Ltd.
WCB chairman Lino Saputo Junior says the business is now fully integrated and has allowed WCB to get more of the consumer branded everyday cheese products segment in Australia and reduce its exposure to international market fluctuations.
Saputo Junior says the company intends to keep raising efficiencies. It wants to grow, investing in capital projects to increase manufacturing capacity, grow milk intake and create new opportunities.
"As for the marketplace at the end of May, we had highlighted for fiscal 2017 that international dairy prices were expected to remain weak with global milk production remaining high and a limited change in demand.
"Raw milk cost is expected to align more closely with market conditions for the 2016-17 milk season. In line with our expectations the price paid to our suppliers was reduced by 14% on July 1. Dairy prices remain weak with no change in demand. The Australian dollar remains volatile."
WCB recently raised A$141m by issuing new shares, bought by about 30% of shareholders. This was used to pay off debt and strengthen the balance sheet.
