Strong sales of high value dairy products like butter have helped with its profit (file photo). Photo: Patrycja Jadach / Unsplash
Westland Milk Products has reported a record profit of $55.9 million for 2023 thanks to strong sales of its high value dairy products like butter.
It is well above 2022's $38.9m result.
Westland chief executive Richard Wyeth said the sustainable financial base meant the company could continue to offer farmers very competitive terms for their milk.
It recently committed to pay farmers the 10 cent premium above Fonterra's Farm Gate Milk Price for the 2024-25 and 2025-26 seasons, extending and improving on payment terms made under the original Scheme of Arrangement when the company was purchased by Chinese dairy giant Yili in 2019.
Wyeth said the company would maintain its push towards long-term profitability by continuing to divert more milk solids into higher-value products in 2024.
"We're proud of this result but we know we still have plenty of room for improvement.
"We're tracking well to deliver on our five-year commitment to build sustainable growth year-on-year.
Wyeth said a $40m investment in a new butter plant at Hokitika last year had allowed Westland to expand strongly in the US market.
"Westgold butter is now stocked in more than 3000 grocery retail outlets in the US, including Walmart stores."
Westland also produces Kirkland Signature New Zealand Grass-Fed Butter for Costco and it is stocked in almost every Costco store in the US as well as Costco global stores in Korea and Taiwan.
Wyeth said revenue of $1.065 billion was slightly above last year's result and very pleasing given the fall in global dairy prices.
"The advantage we have of course is the backing of one of the world's largest dairy companies in Yili.
"Yili's support has enabled us to invest heavily in infrastructure that will maximise revenue from high-margin products, but our ability to remain competitive on milk prices must rely on our ability to stand alone on financial performance.''
Westland and Yili are investing $70m into a new lactoferrin plant at the company's Hokitika plant.
It is expected to continue to reduce reliance on traditional high-margin revenue sources such as infant formula for China, as import demand in that sector continues to soften.
Wyeth said due for completion in the final quarter of this year, first production at the plant will take place in quarter three.