Mistakes in the delivery Westland Shareholders told
Strategy correct, mistakes in the delivery Westland Shareholders told
Westland Milk Products’ shareholders turned out in force at their annual general meeting today to hear retiring chairman Matt O’Regan tell them that while the company’s business strategy was sound, it’s delivery had been poor.
In a frank address to an audience of some 150 shareholders demanding answers, O’Regan acknowledged that Westland’s low payout of $3.62 per kilo of milk solids, topped up from equity to a final payout of $3.88 was “beyond disappointing”, below break-even point for farmers and represented a failure of Westland’s goal to be industry competitive.
“However,” O’Regan said, “our strategy for growing Westland’s capacity to produce value-added products was, and remains, a sound one. Indeed, the survival of this company will depend upon its success.
“While the strategy was not at fault, I have to acknowledge that some aspects of its delivery were not up to standard at both managerial and board level. This, coupled with external market factors over which we had little to no control, produced the poor result detailed in our annual report.”
O’Regan acknowledged that changes have to be made and during the meeting a shareholder resolution for a complete review of the board and its governance and performance was passed almost unanimously, with the full support of the board.
“Of course, some of these changes are already well known,” O’Regan said. “Both our CEO and CFO have left and (new CEO) Toni Brendish has moved quickly to restructure the senior management team. Toni’s vision for the company gives me confidence that we can, and will, put this poor performing period behind us. Westland has the people, the structure and the means to be a top-end supplier of value-added products, which will reduce the effect on our business of the commodity cycle.”
O’Regan said that while the company’s new value-added assets, its nutritionals dryer and new UHT milk plant, had not delivered the returns they were predicted to in their first period of operation. However they were still a highly valuable asset for the company that can be utilised to produce greater volumes of value-added product such as infant formula and UHT milk.
“We are now in a better position to take us forward in the value-add direction we have to travel to remain a viable, highly successful, farmer owned co-operative; one that will, justifiably, earn and retain the loyalty of its shareholders.”
His sentiments were echoed by new Chief Executive Toni Brendish who was addressing Westland’s annual meeting of shareholders for the first time. Brendish was emphatic that the value-add strategy was correct and that problems with its delivery could be rectified.
“The fact that there are more than 43,000 babies born in China each day is a compelling reason to continue to back Westland’s move into producing infant milk powder for the Chinese market,” Brendish said.
She also talked about other opportunities in China and elsewhere in the value-added space, including expansion into specialist adult nutritional products. Westland is also expanding into regions such as Indonesia and Australia to de-risk over reliance on the Chinese market.
“My focus is to extract more dollars out of every amount of milk Westland shareholders produce and return that in value to shareholders.
“We now have significant assets, such as the UHT plant, and we are in negotiation with two significant customers who want to use that plant,” she said.