Australia's biggest dairy processor, Murray Goulburn, could have become a takeover target as plummeting milk supplies pushed the business to a full-year loss of $371 million.
Murray Goulburn's dairy suppliers have been deserting the troubled co-operative after it unexpectedly slashed its farmgate milk price in April 2016, sparking chaos across the industry.
On Tuesday the co-op announced its milk supply dropped by almost 22 per cent to 2.7 billion litres in 2016/17 as other dairy processors paid farmers more for their milk.
It expects its milk supply to drop further in the current financial year, to about two billion litres.
In July, Murray Goulburn had expected a milk intake for 2017/18 of about 2.3 billion litres; in June, the forecast had been about 2.5 billion litres.
Chief executive Ari Mervis said the strength of the co-operative's business depends on a stable milk intake and the support of suppliers.
"The focus areas for the coming year, obviously, remain on protecting the milk intake, a lot of engagement with our supplier base and working with them," Mr Mervis said as he delivered the co-op's full-year results.
Murray Goulburn will maintain its opening farmgate milk for the 2017/18 season at $5.20 per kilogram of milk solids but said it may have to fund part of payments by borrowing up to $100 million if the milk supply falls further.
A final farmgate milk price above $5.20 remains under review and will depend on exchange rates, dairy commodity prices and the milk intake.
Murray Goulburn also said it had received unsolicited indicative proposals for all or part of its business.
"There has been a broad array of interest in the company," Mr Mervis said.
"It's not wholly surprising, given the terrific asset that Murray Goulburn is, that we have had a significant amount of inbound and unsolicited confidential approaches, or interest I should say, being made to the company."
Mr Mervis said the co-operative's board would start "corralling" that interest so that it can consider it in a structured fashion compared to the ad hoc nature in which it had come through.
Murray Goulburn on Tuesday reported a $370.8 million loss for the year to June 30.
The bottom line took a $405 million hit after the co-operative forgave debts owed by farmers under its controversial Milk Supply Support Package (MSSP), closed manufacturing plants and wrote down the value of assets
Mr Mervis said 2016/17 had been difficult for Murray Goulburn.
The co-operative is reviewing its operations, corporate structure and capital structure in a bid to restore strength.
Units in Murray Goulburn's listed entity, the MG Unit Trust, were two cents higher at 64.5 cents at 1314 AEST.
FALLING MILK INTAKE SOURS MURRAY GOULBURN RESULT
* Full-year loss of $370.8m, compared to $39.8m profit in prior year
* Revenue down 10.3pct to $2.49b
* No final dividend
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