Warrnambool Cheese and Butter swings to first-half profit

Cost savings and a weaker local currency have helped the Saputo-controlled dairy group to reverse last year’s loss.

Lino Saputo on a diary farm in Mt Gambier. (Kelly Barnes/The Deal)

Dairy group Warrnambool Cheese and Butter has swung to profit in the first half due to lower costs and a weaker Australian dollar.

Normalised net earnings after tax for the six months to September 30 were reported at $12 million, a strong improvement on the loss of $1.2m in the corresponding period last year.

“The increase in normalised NPAT is due to improved returns from the company’s consumer goods business and joint ventures, realigning raw milk cost with market conditions and a lower average Australian dollar,” WCB said in a statement.

The Victorian dairy company, which remains ASX-listed (WCB) despite being controlled by Canadian giant Saputo, was cautious in its outlook, noting volatile conditions made it challenging to provide accurate forecasts.

“There has recently been some recovery in international dairy prices and the Australian market continues to be highly competitive,” WCB said.

“The Australian dollar is currently above the FY16 average and remains volatile.

“WCB intends to accelerate its growth activities, invest in capital projects, increase manufacturing capacity, grow milk intake and create new opportunities.”

No interim dividend was declared, with the company opting to retain cash for investment into the business.