Dairy co-operative Fonterra has reported a slight drop in full-year net profit, but still made more than a billion dollars with revenue up 15%.
Chief executive Miles Hurrell said the full year ended July had been one of the co-op’s strongest years yet, with the current year positioned to deliver another positive result for shareholders.
Key numbers for the 12 months ended July compared with a year ago:
- Net profit $1.079b (includes tax expense) vs $1.13b
- Underlying profit $1.732b vs $1.527b
- Revenue $26.45b vs $23.0b
- Return on capital $10.9% vs $11.3%
- Adjusted net debt $2.605b vs $2.620b
- Earnings per share 65 cps vs 67 cps
- Full year dividend 57 cps vs 55 cps
- Final milk payout (2024/25) $10.16 per kilogram of milk solids vs (2023/24) $7.83 per kgMS
- Forecast milk payout (2025/26) midpoint $10 per kgMS
“We continue to see good demand from global customers for our high-quality products made from New Zealand farmers’ milk and this is driving returns through both the Farmgate Milk Price and dividends,” Hurrell said.
The company had a strong start to the current year, with last month’s sale of its Mainland consumer business to France’s Lactalis for $4.22 billion, making it one of the largest sales in New Zealand’s corporate history.
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“Our vision is to be the source of the world’s most valued dairy,” Hurrell said.
“Our strategy is designed to grow end-to-end value for farmers by focusing on being a B2B dairy nutrition provider, working closely with customers through our high-performing Ingredients and Foodservice channels.
“We’re also positioning the co-op to deliver further value through our Foodservice and Ingredients businesses, including continuing to invest in new manufacturing capability to meet growing customer demand for our high-value products.”
The co-op’s return on capital of 10.9% was in line with its target range.
“This result was driven by higher operating profit in the Ingredients business, due to demand for our protein portfolio and our use of margin hedging tools and indexed-based pricing,” Hurrell said.
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“Foodservice sales volumes continue to grow off the back of continued demand in Greater China for our high-value products, including UHT cream, butter and mozzarella.
“The business proposed to be divested, Mainland Group, benefited from sales volume growth in the consumer business and the Australia business, having a stable milk price against higher global commodity prices.”
He said operating costs rose as a result of a large once-in-a-generation investment in enterprise resource planning software and costs associated with the sale of the Mainland business.
Outlook strong
“Fonterra’s balance sheet and leverage metrics are in line with the prior year, maintaining the co-op’s robust position and providing optionality for the future,” Hurrell said.
“While there are always risks that may impact future performance, Fonterra continues to target dividend payments within its policy range of 60-80% of earnings in the medium term.
“Our ongoing balance sheet strength, combined with our focused strategic direction, means the co-op is well prepared for the future and positioned to continue delivering positive returns to shareholders.”
rnz.co.nz
