Because of the general economic slowdown across Australia, profit downgrade warnings are becoming a buzzword among Aussie companies. The latest to declare a profit downgrade on Thursday was cheesemaker Warrnambool Cheese and Butter.

The dairy firm said its net profit after tax for 2011-12 would be 20 to 30 per cent lower than the previous year's $18.5 million due to falling prices for dairy products, including skim milk powder. Warrnambool Chief Executive David Lord placed the new profit forecast to $13 million.

However, despite milk prices comprising 70 per cent of Warrnambool's costs, Mr Lord said it will not reduce the farmgate prices it pays to milk producers.

Market prices for skim milk powder had tumbled down to 22 per cent since January and the price weakness is expected to extend to the first quarter of 2012-13, Warrnambool said.

The profit downgrade forecast came amid Dairy Australia's report that global milk production went up by about 3 per cent for calendar 2012 because of favourable seasonal conditions in most of major milk exporting countries such as New Zealand and the U.S.

Since Warrnambool's average profit margin is about 30 per cent, an Austock analyst estimated the 10 to 15 per cent decline in price for milk products could cut the dairy firm's earnings in half despite the fall of the Australian dollar.

However, the analyst stressed that the drop in milk prices is not related to the price war initiated by Australia's supermarket giants. Milk is a major ingredient in the manufacture of cheese and other dairy products.

News of the profit downgrade forecast caused Warrnambool's shares to dip 2 per cent or 7 cents to $3.40 on Wednesday.

On Tuesday, Qantas issued a new profit guidance which warned of a net loss of up to $330 million for the financial year that ends in June due to its losing international operations. The warning caused Qantas's shares to nosedive to an all-time low of $1.125.

RELATED STORIES