First half normalised net profit was up 43%. The business benefited from lower dairy prices although Macquarie notes the second half will experience a significant headwind from rising commodity prices and relative pricing being unfavourable for stream returns.
The uplift in the result was partially driven by margin expansion from lower milk prices. The broker notes a simplification strategy appears to be working but the volume shift into higher value elements is yet to be fully realised.
Macquarie retains an Underperform rating and raises the target to NZ$4.25 from NZ$3.74
Sector: Food, Beverage & Tobacco.
Current Price is $4.70. Target price not assessed.
