Results for Fonterra’s financial year ending July 31, 2023, were announced last week, including reported earnings sitting at 95 cents per share and an after-tax profit of $1.6 billion.
Fonterra chief executive Miles Hurrell said the co-op has delivered strong earnings, even after the farmgate milk price saw a drop from $7.25–$8.75/kg for milk solids to $6.25–$7.75/kg in August this year, due to the decrease in Chinese demand for whole milk powder.
“As the financial year progressed, we saw Global Dairy Trade prices drop, with the average whole milk powder price down 16 per cent compared to last season,” Hurrell said, although he believes the China market will pick up again early next year.
Hurrell said that the co-op recognises the impact of the reduced farmgate milk price on farmers’ businesses and has utilised its strong balance sheet to introduce a new Advance Rate Schedule guideline to assist on-farm cash flow.
“However, we’re pleased to be announcing a strong full-year dividend of 50 cents per share – comprising an interim dividend of 10 cents per share and a final dividend of 40 cents per share.”
Fonterra reported an after-tax profit of $1577 million, which was up $994 million and excluded the net gain from divestments of $248 million, while normalised after-tax profit was $1329 million – up $738 million compared to the same time last year.
“We also saw improved performance in our food service channel due to increased product pricing and higher demand as greater China’s lockdown restrictions started to ease from the start of calendar year 2023,” Hurrell said.
“Further, across the second half, the operating performance of our consumer channel strengthened due to improved pricing. However, we adjusted the long-term outlook for our Asia Brands and Fonterra Brands New Zealand business, resulting in full-year impairments of $101m and $121m respectively.
“Greater China’s reported profit increased $11m to $284m, with the food service channel showing improved margins and resilience to market disruption from covid-19. However, this was offset by the consumer channel, which included a proportion of the Asia brand impairment.”
