Fonterra posts 11% drop in profit as bad weather hits production

SYDNEY: New Zealand dairy group Fonterra reported an 11% fall in full-year profit after bad weather hampered milk production, but gave an upbeat outlook for the coming year.

The world’s largest exporter of dairy products reported net profit after tax of NZ$745mil (US$546mil) for the 12 months ended July 31, down from NZ$834mil a year ago. The result was slightly below expectations of about NZ$757mil, according to five analysts polled by Reuters.

Full-year revenue rose to NZ$19.23bil against NZ$17.20bil a year ago.

“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,” chairman John Wilson said in a statement.

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 are well positioned to deliver higher volumes and new product formats,” Wilson said.

Fonterra has been shifting its business from relying on milk powder shipments to selling value-add- ed consumer products to ride out volatile global dairy prices.

The company announced a fullyear dividend of NZ$0.40 per share, unchanged from the previous year, and maintained its earnings per share outlook for the 2018 year of NZ$0.45-NZ$0.55 per share, as declared in March. — Reuters