Norco milks perilous situation
NORCO weathered the global financial crisis last financial year to post an increased profit on the back of higher milk prices.
In further good news for dairy farmers the higher prices are expected to remain this year, Norco chairman Greg McNamara predicted yesterday.
Speaking after the Lismore-based agricultural co-operative’s annual meeting in Casino, Mr McNamara said profit last financial year was $1.1 million, slightly up from $1 million the previous year and half a million in 06/07.
“The idea is not to have huge profits, the idea is to have reasonable milk prices,” he said.
“At 56.7 cents a litre, we hadn’t seen milk prices like that before, but the industry moved that way and we managed to stay competitive.”
Mr McNamara said the strong milk price was driven by a shortage of milk 18 months ago due to the financial crisis and the global drought which drove stockpiles down.
“This financial year the price has come back a bit to about 54 cents a litre, but we still think the industry will remain quite profitable at this point,” he said.
Although the company no longer produces ice-cream under its own name, it has become a contractor for the likes of Streets and Coles’ new upmarket house brand, Select. “The ice-cream sector did really well. We have introduced a lot of new products and are doing more work for Coles and Streets,” Mr McNamara said.
Still, it was a year of consolidation rather than growth, due to the difficulty in getting credit because of the economic crisis, he said.
The company reduced its debt be selling some ‘non-key assets’ such as two unused milk deposits and better managing stock.
It also went through a restructure under new chief executive Brett Kelly, shedding some management to create a flatter structure.
“Our determination to manage the business in a more effective manner in difficult trading conditions has well positioned us to take advantage of emerging opportunities in the future,” Mr McNamara said.