A reasonable interim result yesterday from New Zealand’s dairy giant Fonterra (FSF) which reported a net profit of $NZ418 million for the six months to January 31, up 2% on last year. The result was on a 5% lift in revenue to $NZ9.2 billion.
The profit compares with a 123% increase a year ago to $NZ409 million when the company was recovering from cuts and restructuring the year before as it battled the impact of the global dairy price slide.
At the same time the dairy giant has confirmed its NZ farmgate forecast price of $NZ6 per kilogram of milksolids, but with a revised forecast earnings per share range of 45 to 55 NZc, down from the earlier figure of 50-60 NZc. After retentions, the forecast payout is $NZ6.40.
An unchanged interim dividend of 20 NZc a share will be paid.
The co-op’s consumer and foodservice business saw a 30% improvement in earnings before interest and tax result (EBIT) of $NZ313 million.
Chairman John Wilson said the co-operative had a strong first half.
“Our half year dividend of 20c per share, payable on 20 April 2017, reflects these strong results especially in consumer and foodservice where we kept up the momentum of our volume to value strategy,” he said in a statement yesterday.
"The co-operative continues to get stronger. We have further reduced net debt which is down $793 million or 11 per cent, and we have a gearing ratio of 46.6 per cent compared with 49.2 per cent in the first half of 2016," Wilson said.
Fonterra said its Australian arm continued its turnaround, with an improved performance following the recent divestment of underperforming brands.
“We continue to make good progress in ensuring a stronger Australian business,” the company said yesterday.
“It is performing very well on the back of a successful turnaround and the business focusing on its strongest brands in product categories where we have a clear advantage.
“We are building on our strengths in cheese, whey, nutritionals, and with our consumer and foodservice brands.”
Milk collection to January 31 was down 2% locally, although the group said this pointed to outperformance given softness in the Australian market.
“A decline of two per cent represents significant gains in market share as overall Australian dairy production has declined at a higher rate due to climatic impacts,” the dairy giant said.
