Murray Goulburn wins Coles cheese supply contract

Murray Goulburn has entered into a five-year national private label contract to supply Coles brand Australian cheese as part of MG’s ongoing push to secure critical mass in the Australian dairy foods market which will underpin and support the company’s growth plans.

The announcement follows a ten-year partnership that MG commenced with Coles in 2014 to supply daily pasteurised milk for Coles private label brands in Victoria and NSW.

The contract includes the supply of a range of Coles brand cheddar-style cheese including tasty, colby, mild and light cheese in blocks, shreds and slices for Coles supermarkets across Australia.

Approximately $130 million will be generated in additional sales per annum and will also deliver a stable stream of profits to MG over the life of the contract.

According to MG Managing Director, Gary Helou, the company aims to build a world-class cut and wrap consumer cheese processing facility at its Cobram cheese plant.

“We are delighted to extend our existing relationship with Coles and its customers to deliver the quality, taste, and freshness of cheese made by Australia’s largest dairy farmer co-operative, which is 100 percent controlled by Australian farmers,” Helou said.

“This additional Coles business complements our investment strategy to build a state-of-the-art supply chain and adds to our critical mass here in Australia, as we look to substantially grow our business internationally.”

As part of its capital investment program, MG has announced plans to invest up to $145 million to significantly increase ‘ready-to-serve’ cheese capacity and capabilities at its new consumer cheese plant in Cobram.

“Cobram will deliver world-leading technology for processing and packaging a range of consumer and food service cheese products including block, slices, snacking and shred,” Helou said.

No tears over spilt milk as Murray Goulburn RTC profits soar

Murray Goulburn Co-operative (MG) today announced financial results for the year ended 30 June 2015.

Overall, MG had a revenue drop of $AUD2.87 billion, down 1.5 per cent compared to last year, which the company said, reflected “product mix optimisation in the face of declining commodity prices.”

With a Net Profit After Tax (NPAT) of $AUD21.2 million, marginally higher than the forecast, the company noted there was “strong growth in the strategic Ready-To-Consume’ (RTC) Dairy Foods business with revenues of $AUD1.13 billion, up 29 per cent on the prior year.

With $AUD500 million in new capital raised and strong operating cash flows, leading to a stronger balance sheet, MG also invested $AUD126 million in strategic capital projects to support growth in the capacity and capability of ready-to-consume dairy foods.

Commenting on the result, MG Managing Director, Gary Helou, said: “We faced difficult external factors with falling commodity prices throughout the year and a strong Australian dollar in the first half of the year, but managed those levers within our control to contain costs, support cashflow and optimise our product mix. 

“MG's strategic drive is focused on building world-leading capabilities to deliver a portfolio of ready-to- consume dairy foods, nutritional products and brands produced in Australia in formats suitable for our growing domestic and international consumer base.

“MG’s strategic shift towards these ready-to-consume dairy foods and value-added dairy products such as nutritionals is already buffering the business against external factors which we cannot control.

“In particular, MG’s Dairy Foods segment enjoyed a stellar year, growing strongly both in the highly competitive Australian domestic market and in key target markets internationally. The segment delivered 29 per cent revenue growth, an outstanding result.

“Our milk intake grew by 5.5 per cent due to a combination of organic growth and new suppliers. Importantly, milk supply grew across most regions, with the exception of the western region, which was down due to unseasonal conditions.”

In MG’s largest Dairy Foods export markets, China and Vietnam, new premium ‘metallic’ Devondale consumer packaging for UHT milk was launched and was well received, particularly in China where it is now helping to secure Devondale’s position among the top three imported milk brands.
Additionally, a range of new consumer and food service products were launched into key export markets including Devondale cream cheese, UHT cream and butter, significantly helping to expand our presence and broaden distribution.

MG said in a statement that it “continues to believe in the solid long-term growth prospects and fundamentals of the dairy industry…and is confident that a global supply response is starting to emerge as a result of the low dairy commodity price environment.”