(Adds comments from company, interim CEO)
By Colin Packham
SYDNEY, Aug 24 (Reuters) - Murray Goulburn MGC.AX , Australia's largest dairy processor, said on Wednesday its annual net profit jumped more than 60 percent, but warned it will face significant headwinds next season from an oversupplied milk market.
Global milk prices have tumbled sharply amid a global supply glut, leading processors in both Australia and New Zealand to slash payments to suppliers and forcing farmers to slaughter cattle. milk prices have risen recently, Murray Goulburn cautioned that Australia and New Zealand were set to enter peak production periods and said challenging conditions were set to continue.
Net profit for the year to end-June came in at A$40.6 million ($30.9 million), up 61.2 percent from the previous year and in line with analysts' expectations.
Profits rose despite a small decline in revenue to A$2.78 billion after Murray Goulburn cut costs by reducing payments to farmers.
The company had faced sustained low commodity prices, a volatile Australian dollar, changes in Chinese regulations, and difficult seasonal conditions in many regions, David Mallinson, interim chief executive officer, said in a statement.
"Murray Goulburn continues to face a challenging macro environment for the year ahead with global markets in over supply and a higher than expected Australian dollar," the company said.
"Commodity prices have shown some upward momentum in August, with recent Global Dairy Trade results showing recovery across most commodities. This recovery comes at a time before peak production in Australia and New Zealand, and only a sustained recovery through those peaks will add meaningfully to milk price returns."
($1 = 1.3135 Australian dollars)