Tatua's top payout and big expansion plans

18:52, Sep 30 2013
Tatuanui School children celebrate Tatua dairy company's new roadside whipped dream aerosol icon.
CREAM TRIP: Tatuanui School children celebrate Tatua dairy company's new roadside whipped dream aerosol icon.

Waikato's Tatua dairy co-operative turns 100 next year and hopes to mark its century with its biggest expansion project ever - a $65 million specialised products drier.

The plan, yet to be approved by the board and shareholders, would enable the specialist dairy manufacturer and exporter to double its capacity for speciality powders production.

The proposed plant would create around 40 new jobs, chief executive Paul McGilvary said.

If the plan gets the green light later this year, it's hoped the plant would be operating for the 2015-2016 season.

Meanwhile, Tatua, New Zealand's oldest independent dairy company, has announced a bumper annual result for 2012-2013, shrugging off this year's severe drought to declare a $7.40/kg milksolids payout, and the second highest earnings in its history.

The payout eclipsed those of fellow dairy co-operatives Fonterra at $6.16, and Westland Milk Products at $6.34.


Directors chose to retain $1.17/kg pre- tax, which if they had paid it out, would have meant a payout of $8.57.

The retention will be used to strengthen the balance sheet for future investment in the co-operative's specialised added-value product growth strategy.

Revenue was $229.7 million, compared to 228.1m last year.

Earnings were down at $107.4m, compared to $109m last year, which McGilvary attributed to the impact of the drought on milk supply received and lower product prices at the start of the season.

Despite this, earnings were still the second highest recorded, he said.

It was the third year on the trot of stellar results for the 108-supplier company but the announcement came with a warning to farmers to prepare for a more challenging 2013-14.

"Our product mix of caseinate and anhydrous milk fat is lower returning currently than milk powder and, if this continues for the balance of the year, it will be more difficult for us to match the financial performance of the milk powder companies.

"It is still early days but the signs are there that 2013-2014 will be a less competitive year for Tatua," McGilvary said.

Tatua does not make any milk powders.

Its manufacturing divisions include ingredients including caseinates and whey protein concentrate; food service products such as whipping and cooking cream, icecream, creme fraiche; consumer products; bionutrients for biopharmaceutical production, diagnostic media and cell culture media; special nutritionals including baby formula ingredients such as hydrolysates, and lactoferrin; and flavour ingredients.

The planned new foods plant would enable the company to double production of specialty powders such a hydrolystates, flavour powders and bionutrients, "our heart and soul", McGilvary said.

"By doubling this capacity we will stay relevant to our key customers who are growing. It should enable us to further grow payouts and to become stronger in our key markets."

The new drier would be equivalent to a 1.5 tonne an hour plant. The building job would go out to tender.

McGilvary said features of the 2012-2013 year were the first full season runs of the new hydrolystate and permeate plants, a combined investment of $10m, and the first year of 24/7 operation of a $20m foods plant.

Two years ago Tatua employed 190 staff, today there are 280 on the payroll, he said.

The company will mark its 100th year with the launch of a commemorative book, written by economic historian Ian Hunter of Auckland, and a number of functions including an event on June 30 marking the incorporation of the company a century earlier to the day.

Next year will also mark the 10th year of Tatua Japan, a venture suppliers will celebrate with a self-funded visit to Japan. McGilvary said more than 35 farmer-shareholders' had so far booked for the trip.