people still ask why MG do 10 years contract with coles, it is profitable?
1. new factories would be “purpose-built, state of the art and the most efficient milk processing plants in Australia”.
MG will make a good return supplying Coles and will have the capacity to supply other customers in time, too, making even higher returns.
2.the cost of the $120 million factories is well and truly covered by the 10-year Coles, if no this contract, MG can not spend this huge money.
3.Coles came to Murray Goulburn because it wanted to work with farmers, the profits can go to farmer directly
4. the price to Coles is based on a farm-gate price and the cost of processing plus a comfortable profit margin, only profit will be happened
5.MG will slash the cost of delivering fresh milk to supermarkets
6. Aside from milk, the deal also allows MG to range its cheese, butter and spreads in Coles, which makes it even more attractive
we still want coles to increase $1 liter milk to $1.2 liter
but from business sense, MG get golden opportunity, if MG do not get the contract, any other company will do
at that time, the situation is bad for MG
The large profit already come year by year through coles!
MGC Price at posting:
$1.15 Sentiment: Hold Disclosure: Held
