Fonterra's full-year profit slumps by 11 percent

Elias Hubbard
September 25, 2017

"We then actually had very good growth across most of the regions New Zealand and our farmers were able to produce a lot of cheap milk off good pasture through the summer and into the autumn previous year".

Normalised EBIT of $1.2 billion was down 15% as a result of reduced margins across the business which also influenced net profit after tax, down 11% at $745 million. The result was slightly below expectations of about NZ$757 million, according to five analysts polled by Reuters.

Revenue increased by 12% to $19.2 billion, with rising prices offsetting a 3% decline in volumes at 22.9 billion liquid milk equivalent (LME).

Fonterra had been able to deliver on its forecast dividend despite changing conditions, and had continued to boost efficiency and develop new revenue streams, he said. "We've demonstrated our ability to deal with those conditions and deliver on our strategy again this year", says Wilson.

Strong milk prices lifted the cost of raw material for Fonterra's value-added consumer items.

Units of the Fonterra Shareholders' Fund rose 0.5 percent to $6.13 and have gained 1.7 percent this year. It confirmed a final Cash Payout of NZ$6.52 for the 2016/2017 season for a 100 pet cent share-backed farmer.

Fonterra reconfirmed its forecast payout to its farmers of $6.75 a kilo of milk solids for the current season, with earnings on top of that between 45 and 55 cents. The turnaround was "due to our ongoing efforts to reduce costs through operational efficiencies, milk volume growth and the impact of the market-based internal raw milk price".

Global dairy prices have risen more than 10 percent since April, data from the Global Dairy Trade Price Index shows, with adverse weather in major exporters underpinning gains.

Demand for dairy has been picking up internationally over the past year.

Other reports by Click Lancashire

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