Westland Milk Products says the turnaround is also driven by a change in strategy and approach through improving quality, cutting waste and costs. (File image) Photo: 123RF
Westland Milk Products has surged back into the black driven by record sales.
The Chinese-owned company reported a profit $39 million for the year ended December compared with a loss of $82.2m in 2021.
The turnaround came as revenue rose 27 percent to $1.04 billion on increased production and a broader range of products.
"This is the first time in our company's 85-year history that we have surpassed the $1b revenue mark," chief executive Richard Wyeth said.
The turnaround was also driven by a change in strategy and approach through improving quality, cutting waste and costs, Wyeth said.
"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.
"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."
The company has performed better than expected, with production up 11 percent, and he was optimistic of maintaining its growth despite inflation and falling milk production in New Zealand, Wyeth said.
Westland pays a 10 cent premium above Fonterra's payout, which was worth $9.30 a kilogram of milk solids last year for their Westland and Canterbury suppliers, but a falling milk price would require cost controls to ensure that premium is maintained, he said.
The financially troubled company was rescued by Chinese dairy giant Yili in 2019 in a contentious takeover.
Since then, it has diversified into more consumer products, such as its acquisition of North Island butter processor Canary last 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," Wyeth said.
But he cautioned that lower ingredient prices would affect revenue, with sales in China expected to stabilise, although other international markets would offer future growth.