Warrnambool Cheese and Butter Factory (WCB), the Australian dairy firm, had some more bad news for the market yesterday (28 May) when it admitted that its annual losses would be deeper than forecast.
WCB is facing the cost of having to reverse plans to cut the price it pays its milk suppliers after some left the business and put the group’s supply in jeopardy.
The firm had forecast a net loss of A$10-12m (US$8-9.6m) but said yesterday that a series of factors weighing in the business meant losses are “likely to exceed” that prediction.
WCB blamed the “continuing weakness” in global dairy prices, the strong Australian dollar, the loss of part of its milk supply and costs linked to its planned venture with National Foods for the gloomier forecast.
“The continuing volatility means that the final amount of the loss cannot be accurately determined at this stage,” the company said.
Uncertainty reigns over WCB’s planned venture with national Foods, an agreement drawn up after last year’s sale of Dairy Farmers.
The fate of the 50:50 venture remains unclear after WCB pulled a rights issue drawn up to fund its stake in the business last month.
WCB told just-food earlier this month that changes to the structure of the venture are a “possibility”.
The firm’s managing director also left the business following the U-turn on the prices it pays its milk suppliers.
Current CEO John McLean has agreed to extend his term until at least the middle of next year.