DAIRY companies Murray Goulburn, Warrnambool Cheese & Butter (WCB) and Bega have all posted strong results for the past financial year but the outlook for global dairy prices over the next 12 months still looks shaky.
After Canadian dairy giant Saputo was the successful bidder in the takeover battle for WCB earlier in the year, the company revealed a net operating profit after tax of $21.3 million, or the equivalent of a $13.8m or 184.1 per cent rise.
It also recorded a $19.7m or 77.3pc improvement for earnings before interest, tax, depreciation and amortisation - to $45.2m - compared to the previous year.
Bega Cheese, which also took part in the bidding war for WCB, appeared to reap the rewards of Saputo's victory too.
After cashing in its shares - a 19pc stake in WCB - Bega pocketed $99m.
And this week, the dairy manufacturer posted a record profit after tax of $66m - an increase of $40.6m from the previous year or a jump of 160pc.
But even when the payout was removed from the equation, Bega's profit was still $30m - an increase of 15pc year-on-year.
Total revenue was more than $1 billion in the 2013-14 financial year, which Bega chair Barry Irvin said reflected strong global prices in the first half of the season.
WCB's Mr Lord painted a similar pictured in revealing his company's results.
"This improved pricing was further complemented by the benefits of a depreciating Australian dollar," he said.
But he conceded the outlook for the coming 12 months was volatile, with international dairy prices reduced from the highs of last season.
Murray Goulburn announced its profits yesterday, disclosing record revenues of $2.917 billion (up 22pc). However, the co-operative's net profit after tax was $29.3m (16pc decrease), which was down from the $34.9m posted the previous year.
MG managing director Gary Helou expected world dairy prices to recover this year, but said it was "difficult" to predict the timing and strength of this change. The company also revised it's full year forecast price down to $6 per kilogram milk solids (down from $6.15-$6.03/kgMS), with step ups unlikely unless the situation on the world market changed.
John Droppert, who is a dairy analyst for Dairy Australia, said dairy commodity prices had been in a slump for a few months, plummeting in value by 40pc since the start of the year.
"The Russian ban has thrown more uncertainty out there too and this is more likely to prolong what is happening with commodity prices," he said.
While strong global dairy prices had helped line the pocket of processors such as WCB and Bega this year, Mr Droppert said he suspected if this current slump was to stretch on for longer than expected it would see Australian milk companies making lower profits next time around.
"They might have to dip into that money to support the farm-gate prices already announced ... and to hang on to farmers to keep milk flowing," he said.
China has dropped out of the global market but is expected to re-enter later this year, which could see the market rise again.
"Whether this happens before the spring peak we don't know, and the market is weak, which is a real threat now," Mr Droppert said.
He said another factor that could affect the Australian dairy industry was milk production levels in the US.
"Their latest production data showed 4pc growth for July compared to July last year," he said.
"They had been tracking along on 1.5pc growth and then all of a sudden they've made this jump."
While a strong corn crop in the US could push grain prices down, Mr Droppert said the surplus grain would also make good feed for the country's cows.
"The US dairy market internally is strong," he said.
"Butter prices are twice what they are on the global market but you could see more US product on the international market if production grows.
"It's another risk to watch out for on prices here."
