* EBITDA up 105 pct at $53 million
* Outlook for rest of year positive
* Demand from China underpinning growth
SYDNEY, Feb 28 Australia's Warrnambool Cheese
and Butter Factory Holdings Co reported a doubling in
first-half profits on Friday, a step towards justifying the rich
bidding war that left Canada's Saputo Inc owning almost
90 percent of the company.
Warrnambool said the outlook for the remainder of the year
was positive with milk prices supported by strong international
demand. The easing in the Australian dollar from its highs last
year is also good news for the company.
"The improved market conditions experienced in the last
quarter of FY2013 have continued into FY2014," said Chief
Executive David Lord.
Warrnambool said earnings before interest, tax and
depreciation and amortisation (EBITDA) in the six months to Dec.
31 was A$59.2 million ($53 million) amid strong international
dairy demand and pricing, compared with A$29.3 million in the
previous corresponding half.
The company's shares were up 1 percent at A$8.74. They have
surged around 90 percent since mid-September when Bega Cheese
Ltd kicked off the fiercest bidding war in Australia in
Saputo eventually beat out Bega and fellow Australian
company Murray Goulburn Co-operative Co Ltd to claim majority
ownership of Warrnambool in January.
It was prevented from gaining full ownership by Japanese
beverage giant Kirin Holdings Co Ltd, which decided to
retain its 10 percent stake. Kirin, through its local unit Lion,
has an important cheese making and packaging partnership with
The intensity of the struggle for Warrnambool - nine bids or
counter-bids in total - reflected huge interest in Australia's
agriculture assets amid surging demand from increasingly
affluent Southeast Asia for both high-tech milk extracts and
traditional dairy products.
Sales of dairy products in China are worth some $45 billion
a year and are expected to grow rapidly through 2017 to about
$89 billion, according to a Frost & Sullivan report.
Lord said that a decline in production in China had reduced
their exports to the rest of the world amid a struggle to meet
"That's creating a supply side contraction ... and we expect
to see that continuing for the rest of this year," he said.
Saputo currently has a sales office in China, and is selling
dairy products into other Asian markets such as Japan, Taiwan
and South Korea, out of its Argentina operations.
The Canadian company, largely focused so far on north
America, said earlier this month it would consider further
acquisitions in Australia as it reported third-quarter net
profit of C$144.1 million ($129.8 million), compared with C$130
million a year earlier.