Saturday, April 20, 2024

Tatua rockets to record earnings and payout

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Dairy co-op has steadily increased its payout since the dairy downturn of 2015-16.
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Tatua Dairy Co-operative has announced a record $12.30/kg milksolids payout to its 101 dairy farm suppliers after making record earnings of $15.20.

Group income in the 2023 season was $537 million and the earnings available for payout were $225m.

The retention of $2.90 determined by the directors is equivalent to $43m for reinvestment in the business, more than double the retention last year.

Tatua has steadily increased its payout since the dairy downturn of 2015-16, in annual increments ranging from 30c to $1/kg.

It has also maintained a very healthy $2-$3 margin over Fonterra’s payouts because of its value-add products and a tightly controlled catchment.

Chair Stephen Allen and chief executive Brendhan Greaney said the payout decision balances the needs of the farming businesses where costs have increased well beyond mainstream inflation and the need to continue to invest in the company and maintain balance sheet strength.

Gearing at year’s end (debt divided by debt plus equity) averaged 21.7% for the year but was 16% at balance date following the sale of inventory higher than usual.

“Revenue from our bulk ingredients business of caseinate, whey protein concentrate (WPC) and anhydrous milkfat (AMF) was the highest ever.

“It was buoyed by global dairy protein prices in particular, which contributed significantly to our earnings uplift. 

“Prices have subsequently fallen, which will result in more typical earnings over the year ahead.

“The bulk ingredients revenue uplift coincided with combined revenue from our inherently more stable specialised nutritionals, foods and flavours businesses also reaching a new high, and making a valuable contribution to overall earnings.”

Greaney said diversification of market across the ingredients and value-add products helps underpin earnings.

Tatua is not as dependent on China as Fonterra, although its three main markets for ingredients are China, Japan and the United States, and it employs in-market sales staff in those three regions.

Product volumes fall about 50:50 into ingredients and the value-add products and just under 90% of all output is exported.

The large retention will be used for a range of planned projects including plant replacement, sustainability and new equipment for cream-based consumer and foodservice products.

Tatua processed 14.85 million kilograms of milksolids during the year, 1% higher than the previous year.

The average production per farm was 147,000 and the farmgate milk revenue was $1.8m.

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