Fonterra full year profit down 11pc

Fonterra's profit is down but revenue has risen

CHRISTEL YARDLEY FAIRFAX NZ Fonterra's profit is down but revenue has risen

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). The final cash payout was $6.52 for the 2016/17 season for a 100 percent share-backed farmer.

The company affirmed its forecast 2017/18 payout of $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents, making the forecast total available payout of $7.20 to $7.30, before retentions.

The dairy co-operative's net profit for the year ended July fell 11 percent to $745 million, compared with last year's $834 million.

Analysts expected to see a weaker annual result as higher farmgate milk prices, the key input cost for Fonterra, were expected to make their presence felt on its margins.

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", said Wilson.

Fonterra's consumer and foodservice business continues its strong performance. This volume growth across these two portfolios has delivered normalised EBIT of $614 million, an increase of 6% on a year ago. This year it sold more than 5.5 billion LMEs, an additional 576 million LME on last year.

"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.

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