Dairy co-op Murray Goulburn will cut its farmgate milk solids price and has accepted the resignation of its managing director and chief financial officer.
The company, which is Australia’s largest dairy processor, announced on Wednesday the $5.60/kg it announced in February it would be paying farmers for milk solids is “no longer achievable”.
Murray Goulburn has advised suppliers of a revised price between $4.75 and $5.00/kg.
But it has also announced a support payment program it says will result in an effective milk price of $5.47/kg during the current financial period.
The price drop corresponded with a significant cut to the company’s forecast net profit after tax for 2015/16.
Murray Goulburn is now forecasting a NPAT of between $39m and $42m, down from the February forecast of $63m.
The processor said the downgraded figures were the result of unfavourable exchange rate shifts, lower-than-expected sales to China, and global oversupply impacting the value of its held stocks.
Wednesday’s profit announcement, which came after a five-day trading halt, was joined by the announcement that the company’s managing director, Gary Helou, would step down.
Helou will be replaced by David Mallinson as interim CEO, the company said.
Murray Goulburn chairman Philip Tracy said history would judge Helou as a visionary leader who delivered a strategy that has transformed the industry.
“Gary has made a significant contribution to MG and has been a powerful driving force behind our transition to become a globally recognised, ASX-listed food business,” Tracy said.
“We thank Gary for his passion, drive and leadership during what has been an important transformation period for MG.”
Helou was proud to have provided two consecutive years of premium milk prices to Australian farmers.
“While maintaining this price has proven to be difficult in current market conditions,” he added, ”I firmly believe MG has the foundations in place to support a strong and successful business in the years ahead.”
Following Helou’s announcement, Murray Goulburn chief financial officer Brad Hingle also resigned from his position.
Hingle will stay on at the business as it delivers its 2015/16 financial result, however.