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Murray Goulburn takes $108m Woolies hit

Business

Troubled dairy co-operative Murray Goulburn will lose $108 million in revenue after supermarket giant Woolworths switched suppliers for several of its own label dairy products.

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Murray Goulburn, whose managing director Gary Helou quit in the wake of repeated cuts to what the ASX-listed company pays farmers for milk solids, has lost the contract to supply Woolworths’ cheese, UHT, adult milk powder and cream.

The dairy co-operative says it will lose $108 million in revenue but the impact on its FY17 results will be limited because it plans to “redirect this capacity to other markets”.

“We believe our tender to retain this business was competitive, whilst balancing acceptable returns for our products given the current environment for our farmer/suppliers and investors,” Murray Goulburn interim chief executive David Mallinson said in a statement today.

While Murray Goulburn retains the contract to supply Woolworths’ own label butter and shredded mozzarella, rival Bega Cheese has picked up the contract to provide some of Woolies’ cheeses from January.

-AAP

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