Fon­terra’s Year Profit Drops By 11 Per Cent

Fiji Sun - - Global, Regional Business - mon­ica.aguilar@fi­jisun.com.fj

New Zealand dairy gi­ant Fon­terra has re­ported a weaker full-year profit, as the re­bound in milk prices hits its profit mar­gins.

The dairy co-op­er­a­tive’s net profit for the year ended July fell 11 per­cent to FJD$1bil­lion, com­pared with last year’s FJD$1.2 bil­lion. Rev­enue climbed about 12 per cent to FJD$28.2 bil­lion, but milk vol­umes fell about 3 per cent. “De­spite lower milk vol­umes due to poor weather in parts of the sea­son, the busi­ness de­liv­ered a good re­sult by pri­ori­tis­ing higher value ad­vanced in­gre­di­ents and grow­ing our sales of these in-de­mand and spe­cialised prod­ucts,” said chair­man John Wil­son. The com­pany said the strong re­cov­ery in milk prices had been good for sup­pli­ers, but it also raised the cost of raw ma­te­rial for its value-added con­sumer items, which squeezed its mar­gins to 17 per­cent, from 21 per cent a year ago.

Fon­terra re­con­firmed its fore­cast pay­out to its farm­ers of $9.93 a kilo of milk solids for the cur­rent sea­son, with earn­ings on top of that be­tween 45 and 55 cents. “We are well po­si­tioned to de­liver higher vol­umes and new prod­uct for­mats in our con­sumer, food­ser­vice, and ad­vanced in­gre­di­ents port­fo­lios, and are con­fi­dent in our fore­cast earn­ings,” Mr Wil­son said.

It has con­firmed the fi­nal to­tal pay­out for the re­cently com­pleted sea­son was $9.60. Fon­terra said sales to China had risen, but it had found it tougher in the rest of Asia, while Aus­tralia and Latin Amer­ica were marginally softer.

How­ever, its in­vest­ment in Chi­nese dairy com­pany Be­ing­mate con­tin­ued to weigh on earn­ings, with Fon­terra tak­ing a $111.8m hit through a share in its losses and writ­ing down the value of the as­set.

Photo: RNZ

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

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