High value products key to future success
07 November 2018
High value products key to future success – Westland Milk Products’ annual report
Westland Milk Products’ primary focus will be to deliver a competitive payout for the 2018-19 financial year Chairman Pete Morrison says in his report to shareholders in the dairy co-operative’s annual report released today (07 11 2018).
Morrison says Westland’s new five year business strategy has the potential to add significant value to its business.
“During the year we completed a strategic roadmap,” Morrison says. “The core of this strategy is to produce differentiated products that leverage our heritage and location, enabling the company to grow value for shareholders in terms of payout and their farm properties.
“We worked hard during 2017-18 to build the foundations for Westland’s long term future. This included a focus on getting the basics right and improving our right-first-time performance. There is, however, still more to do. Our first aim is to deliver a competitive payout for the 2018-19 financial year, while focussing on driving better, long-term returns and value to our shareholder farmers.”
“There is a full range of opportunities in front of the co-operative, as well as new emerging possible opportunities. However, if the co-operative is to realise all the opportunities in front of us we need access to new and increased capital.”
A key to achieving a better outcome for shareholders will be the co-operative’s current capital structure review, Morrison says. The Board will give shareholders a first progress report on the review at the company’s annual general meeting in Hokitika on 5 December.
“The Board is conscious that we have relatively high debt levels and limited financial flexibility. It is therefore timely to look ahead and consider all options that can provide a sustained higher payout and improve shareholders’ and the co-operative’s financial flexibility. Obtaining new capital would make a significant difference.”
Chief Executive Toni Brendish focussed her report on Westland’s strategy to ‘bring life’ to the company purpose of Nourishment made beautifully for generations.
Brendish says that during 2018-19, Westland will complete plant upgrades with the goal of being able to produce high value segregated products throughout the season, not just on the season’s shoulders. Currently, production capacity at Westland means the company is forced to process high volume but low value bulk powders in order to get the milk through during peak.
Brendish pointed to the fact that in 2017-18 Westland upped its value-add income by $15million as evidence that segregated, value-add product can produce success.
Other examples of where Westland succeeding when it enters markets less vulnerable to global commodity price fluctuations include: Westgold butter year-on-year growth up 50.4% in the New Zealand grocery market with three million blocks sold in New Zealand in three years; UHT sales of
6.045 million litres compared with 1.024m in the previous year; nutritionals (including infant formula) up 4543mt to 15,263mt; China achieved 17.4% YOY volume growth.
Health and safety achievements are also highlighted by Brendish as a core achievement for 2017-18. Westland reported significant reductions in work-related injury and down time and a corresponding lift in health and safety compliance.
“It is no coincidence that we are seeing quality improvements at the same time as we see staff health and safety improve. A safe workplace creates a culture that flows through to working well, efficiently and ensuring a high quality, safe, product.”
The full annual report can be downloaded here: https://westland.co.nz/assets/DownloadDocuments/Annual-Report-2018.pdf