Warrnambool Cheese and Butter profit sliced in half

Warrnambool Cheese and Butter (ASX: WCB) reported its full-year 2013 earnings today, keeping sales steady but slicing profit in half. Total revenue for 2013 clocked in at $496.5 million, essentially unchanged from last year’s numbers.

But stagnant sales and high costs turned the company’s profits sour. After-tax net operating profit dropped a whopping 50.7% to just $7.5 million. “FY 2013 has been a difficult and disappointing year, with results adversely impacted by flat international prices, a persistently high Australian dollar and high raw milk cost relative to market conditions,” said Chairman Frank Davis in a statement today.

But although this year curdled the company’s success story, its balance sheet remains within policy range, with debt comprising around 32% of the company’s total assets. In the latter part of the year, Warrnambool’s situation improved slightly with an uptick in international powder prices and a depreciating Australian dollar (which helps exports).

Looking ahead, the company expects prices to prove more profitable for 2014. A weakening Aussie dollar has expanded margins, while Warrnambool continues to churn ahead with various business improvement projects.

Warrnambool’s plummeting profit might have some investors worried about its dividend. If you’re in the market for high yielding ASX shares, get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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