Murray Goulburn gets set to announce cuts

I think MG is on the right track. Cutting out the inefficiency such as cut head office staff by 10 per cent  and 10 plants  to be be shut in order to accommodate the fact that supplies have fallen.  Look at what 3G capital does with Heinz.
Painful cost-efficiency program for big, old brand firm.

Given its annual revenue still amounting to $2.3 billions, even one or two% increase in efficiency of its supply chain is more enough for current valuation.   As an investor, I like MG continue to restructure and even start selling idle capacity and plants.  I empathize with certain farmers to be affected adversely.

From the balance sheet, MG has way too much fixed asset in plants and properties. Starting to shut and sell idle assets looks logical.  I continue to hold, because MG has too much potential to gain from restructuring and asset sale.

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Dairy shake-up continues as Murray Goulburn gets set to announce cuts

http://www.theaustralian.com.au/bus...s/news-story/0712a74166e451c4fcc896434f90c8b6

If the talk in the dairy industry is right, then next week Murray Goulburn will come up with a new plan to help cut costs and boost farmgate milk prices in order to shore up its farmer base.
One year ago, MG created havoc in the industry when, after predicting an increase in farmgate prices to over $6 a kilo of milk solids, it slashed them below $5 a kilo.
The action helped cut its milk intake by at least 20 per cent, though this was also due in part to last year’s wretched season, in which heavy rain decimated supplies.
The Murray Goulburn (MGC) stock price fell from a high of $2.14 on April 21 to as low as 82 cents by May 19.
It has barely budged since trading in late morning trade at 98 cents a share, up one cent on Monday’s close.

New boss Ari Mervis is expected to unveil his new plan next Monday, and it will include details of which of his 10 plants will be shut in order to accommodate the fact that supplies have fallen.
The industry is speculating the Maffra and Rochester plants in Victoria will go, with a question mark also hovering over the milk plant at Kiewa.
Mervis is new to the game, starting at the company in early February and an industry outsider who has shifted over from the beer industry.
He has a new chair in former Ferrier Hodgson corporate undertaker John Spark who replaced dairy farmer Phil Tracy.
Much of the restructuring work was completed under the reign of former boss David Mallinson who cut head office staff by 10 per cent or about 200 people.
More cuts are likely.
MG’s share of the local milk production peaked at 37 per cent in the 2015 financial year but has fallen since with all processors boosting their share and arch rival Fonterra increasing to over 18 per cent from 17 per cent.
Fonterra’s farmgate price is $5.20 a kilogram, well above MG which underlines the competitive disadvantage MG faces.
Next week’s statement is also due to underline working capital and other changes to restore the company’s balance sheet and put its finances back into a competitive position.
Rising global prices will help along with a better season.