First time in company’s history it has surpassed $1 billion in annual revenue
Westland Milk Products has staged a significant financial turnaround, posting record sales and a $NZ120million rebound in profit compared to last year.
Revenue for Westland in the 12 months to December 31, 2022, increased 27 per cent year-on-year to $NZ1.04 billion, enabling profit of $NZ39 million, or 69c per kilo of milk solids, a $NZ120m turnaround over 2021.
This was on the back of record milk prices in 2022, hitting $NZ9.40 per kilogram of milk solids (KgMS) during the year.
Westland continues to pay farmers a 10c premium above the forecast Fonterra KgMS price, contributing $NZ535 million into the West Coast and Canterbury economies through milk payments to farmers in 2022.
Westland CEO Richard Wyeth said the company’s strategy of focusing on high-value product sales, leveraging off the West Coast’s reputation as a source of premium dairy products and ingredients, was now paying dividends.
“This is the first time in our company’s 85-year history that we have surpassed the $1 billion dollar revenue mark,’’ Mr Wyeth said. “Having the support of Yili has enabled us to invest in our people and the infrastructure needed to increase production and sales of value-added products.
Mr Wyeth said the turnaround in performance is also a result of a well-planned, whole-of-business approach to improve quality, reduce waste, increase sales, improve opportunities for staff and reduce costs of production.
“The biggest contributor to increasing revenue has been our high-value product strategy and to some extent high global commodity prices but right across the business we have focused on doing everything well,’’ Mr Wyeth said.
“Customers willing to pay a premium for high-value products have high standards. We’re working with our entire supply chain to ensure we can demonstrate these standards so that our customers can see for themselves the value of our ingredients and products.’’
Mr Wyeth said the financial performance was well ahead of company projections and he remains optimistic about maintaining momentum and growth for Westland, despite ongoing international inflationary pressures and overall reductions in milk supply across New Zealand.
In 2022, Westland processed an 11 per cent increase in milk solids year-on-year. This supported an operational cash conversion cost saving of 10 per cent year-on-year, equivalent to around $NZ18 million.
While Westland was able to pay farmers a record price of $9.40 KgMS in 2022, the recent milk price downgrade and ongoing impacts of inflation meant Westland would continue to take a cautious approach in managing costs to ensure it could continue to pay a premium for milk.
Following Westland’s acquisition of North Island butter processor Canary in 2022, Canary posted a 28 per cent revenue increase over budget forecasts and increased profit by 129 per cent ahead of budget for the year.
“Overall, the business is well placed for 2023. Our value-added strategy is going from strength to strength, our recent acquisition of Canary has gone extremely well, and our consumer butter sales are expanding domestically and internationally well ahead of schedule,’’ he said.
“We are excited about what can now be achieved for the future. While ingredient prices are more subdued in 2023, which will impact our revenue, the team in China sees the market being reasonably stable over the coming 12 months with balanced supply and demand but we are also positioned well in other international markets for future growth.’’
