Fonterra reports $583m annual profit
Fonterra, which has been divesting overseas assets to focus on New Zealand milk, has decided not to sell a stake in its Australian business, which may reduce the $1 billion in returns slated for shareholders.
Under chief executive Miles Hurrell’s leadership, Fonterra has been selling assets after a period of global expansion failed to deliver the promised profits and left it with too much debt. Hurrell has moved the co-operative’s focus back to New Zealand where he is looking to eke out more value from the milk produced by its 10,000 farmer shareholders.
‘‘The co-op is making tangible progress against our strategy – namely to focus on New Zealand milk, be a leader in sustainability and a leader in dairy innovation and science,’’ Hurrell said when announcing the company’s annual result yesterday.
He said the sale of the company’s Chilean assets was progressing, but after looking at a number of options for its Australian business, Fonterra had decided it was in the co-operative’s best strategic interests to maintain full ownership.
Fonterra’s Chilean assets, dairy brand Soprole and its milk supplier Prolesur, do not require any New Zealand-sourced milk or expertise while its Australian business used both Australian and
New Zealand milk. ‘‘Australia plays an important role in our consumer strategy with a number of common and complementary brands and products and as a destination for our New Zealand milk solids,’’ Hurrell said. ‘‘The business is going well, and it will play a key role in helping us get to our 2030 strategic targets.’’
Fonterra’s profit slid 3% to $583 million in the year to the end of July. That included an $80m hit to its Sri Lankan business following economic disruption in the nation. Revenue rose 11% to $23.4b, but sales volumes fell due to shortterm shifts in demand and ongoing shipping and supply disruptions.
The co-operative confirmed its final farmgate milk price for the 2021/22 season was a record $9.30 per kilogram of milk solids, injecting $13.7 billion into the economy.