O’Regan will be stepping down as chairman and retire from the board on March 31, 2017.
O’Regan acknowledged that the final net average cash payout of NZ$3.88 ($2.78) per kilo of milk solids was disappointing and below break-even point for farmers.
“This payout also failed to reach our goal of being industry competitive,” O’Regan said.
“However, while we closed the 2015-16 season with a less than desired performance by our company, we started the 2016-17 season with more product capability and flexibility than ever before,” he said.
Westland’s reported net loss after tax (NPAT) was NZ$14.5m ($10.4m) for the financial year ending July 31, 2016, reflecting the use of retained earnings.
O’Regan said the poor result was due to a higher cost structure in the business – “necessary to support our value-added strategies” – combined with lower than forecast sales of these products due to a mix of commissioning issues and rapidly changing markets.
Revenue decreased NZ$51m ($36.6m) from NZ$639m ($458m) to NZ$588m ($422m), which the company said was mainly due to international dairy market prices remaining weak as a result of continued global over supply.
Total assets for the Westland Group increased NZ$33m ($23.7m) from NZ$538m ($386m) to NZ$571m ($410m), with the completion of the construction of the D7 nutritional and UHT plants.
Total equity increased by NZ$34m ($24.4m) to NZ$242m ($174m), due to the positive movement in the hedge reserve.
A focus on cash flow management during the year resulted in operating cash flows of NZ$19.8m ($14.2m) in FY16, which allowed Westland to reduce its short term working capital debt to NZ$20m ($14.4m) as of July 31, 2016.
O’Regan said the New Zealand dollar remaining stubbornly high was also a factor in the company’s economic performance.
JV with Ausnutria
He said that the announcement of a joint venture with nutritional powders customer, Ausnutria, to blend and can nutritional products will significantly increase production of value-added powders.
O’Regan also signaled that changes to the way Westland manages its milk flow are under investigation to enhance the ability of Westland to make more value-added product.
In announcing his decision to step down as chair, O’Regan said he would stay on until March to give Westland continuity of governance while new CEO Toni Brendish establishes herself into the role.
O’Regan will remain a shareholder/supplier of Westland through the operation of his West Coast dairy farm.