The Australian reports that some investors fear the co-op, which collects and processes more than a third of Australia’s 9.3 billion-litre milk pool, could downgrade earnings by more than 15 per cent and cut its milk price by 50c or more after its units were halted from trading on Friday.
An announcement is expected as early as today.
A sustained global slump in dairy prices due to lower demand in China and Russia has kept whole milk and skim milk powder prices to 10-year lows as a major supply-demand imbalance persists, thwarting chief executive Gary Helou’s hopes for a recovery.
During the first half the co-op suffered negative cash flow of $198.2 million, which included a $173m increase in working capital due to the inventory build-up. This is partly seasonal given 55 per cent of the group’s revenues are traditionally generated in the second half.