Focus on efficiency works for Westland Milk

Photo / ODT files

Westland Milk Products is on track to achieve its target of $78million in savings through increased efficiencies and reduced costs across key areas, chief executive Toni Brendish says.

New Zealand's second-largest dairy co-operative, which had been under fire for poor financial performance, posted an after-tax profit of $1.5 million in the 12 months ended July 31, from a loss of $10.3 million a year earlier.

In the company's annual report, released yesterday, new chairman Pete Morrison said the 2016-17 financial year was characterised by "challenge and change'', with new leadership at board and management levels.

"With Westland finishing the 2015-16 year in the unenviable position of offering its shareholders the lowest payout of any New Zealand dairy company, we began the new financial year under considerable financial pressure.

"Understandably, our shareholders were demanding answers and calling for both the board and management to do much better.''

Ms Brendish, who has just completed her first year in the role, initiated a review of the company with a strong focus on managing costs and increasing efficiency. At the same time, the board concentrated on reviewing its own performance.

As a result, Westland's year had ended with a sense of confidence, Mr Morrison said.

"In partnership with our management team, we have taken this co-operative from one that was offering unsustainably low returns, to a position where our prediction for the 2017-18 season is industry competitive, setting Westland and its shareholders up for a more secure future.''

However, its final 2016-17 net average cash payout of $5.18 was not the result shareholders needed, though it would not have come as a surprise.

Shareholders would be watching its performance carefully to ensure it could deliver on its 2017-18 predictions and then maintain that competitive position in future seasons.

Boosted by a payout prediction for 2017-18 in the $6.40 to $6.80 range, shareholders were now exhibiting more confidence in their company, he said.

Ms Brendish said the period of "enormous change'' had set company up to perform far more efficiently and with a more sustainable culture.

The cost savings achieved could not be a one-off and the efficiencies and savings had to be embedded "as part of the way we work'', she said.