MG reveals job cuts

MURRAY Goulburn board chairman Phil Tracy said the company’s $2.8 billion revenue was down 3.3 per cent on the previous year, but overall that was not much of a fall.

He was speaking after the company released its full year results last Wednesday.

Cost cutting measures and streamlining of processes will mean around 200 job losses from MG, primarily from Melbourne’s head office.

Mr Tracy could not confirm if any Leongatha staff would lose their jobs.

“MG announced another round of cost cutting, efficiency driving measures which will cut $50 to $60 million annualised cost out of the business,” he said.

“We committed to our farmers that if we can get that amount out annually over the term of the milk supply support package, it will help offset its recoupment.”

Mr Tracy is expecting $10 million worth of savings in one off costs, with the net benefit expected to be $10 to $15 million in first year.

The final milk price was $4.80 per kilogram of milk solids, impacted by lower commodity prices some increased costs.

“The bulk ingredients market has fallen right away, with $300 million less revenue. We switched products into dairy foods and revenue was $1.3 billion, up 17 percent on the year prior,” Mr Tracy said.

“We had one major negative and one major positive, but it was not enough to fill the gap of falling bulk commodity prices.”

MG posted a net debt of $480 million at gearing of 29 per cent, what Mr Tracy described as a “very strong balance sheet”.

“From a farmer’s perspective, the big ticket item is the internal cost reductions. The savings all goes back into milk price,” he said.

“We aim to do everything we can to offset the milk supply support package.”

Milk supply dipped around 240 million litres on an annualised basis, which was within MG’s forecasts.

“I think all regions have had a really tough July. The weather has played a part as well in affecting July’s supply. Spring conditions are looking really good, which could make up for a lot of that,” Mr Tracy said.

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Posted by Tayla Kershaw on Aug 30 2016. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry