Westland Milk cuts 2018 milk payout forecast

Westland Milk CEO Toni Brendish. Photo / File

Westland Milk Products, New Zealand's third-largest dairy company, has cut its forecast milk payout for the 2017-2018 season citing the disruption on the West Coast caused by ex-Cyclone Fehi.

Westland Milk's board met last week and considered its options in the wake of the storm and "the bottom line financial impact due to interruption in production," chair Peter Morrison said in a statement.

"The costs to Westland were significant, equivalent to some 8-10 cents per kilo of milk solids on payout. As a result, we were obliged to approve a new payout forecast range of $6.10 to $6.40."

It marks the second reduction for the dairy cooperative, which had forecast a range of $6.20 to $6.50/kgMS in January and a range of $6.40 to $6.80/kgMS last August.

The latest forecast means Westland may yet match Fonterra Cooperative Group in its milk payment this season. Fonterra is forecasting a payout of $6.40/kgMS.

Westland returned to profit last year, with earnings of $1.5 million in the 12 months ended July 31, from a loss of $10.3m a year earlier.

The company has refreshed its governance and leadership team in the wake of criticism about its lagging returns to farmers. In October, shareholders approved a plan to shrink its board to eight from 11 including three independents chosen for their competence.