New Zealand dairy cooperative Fonterra (ASX: FSF) – which manages a portfolio of brands including Mainland cheese and Fresh n’ Fruity yoghurt – has raised its profits 23 percent to NZ$674 million in the first half of the financial year 2024.
The company also had good news for investors, posting an interim dividend of 15 cents per share, up from 10 cents.
Fonterra CEO Miles Hurrell identified higher sales volumes and margins as the factors behind the coop’s profit lift, and said that despite continuing uncertainty on global markets, their results had continued strong.
“I’m pleased to report we’ve continued the positive momentum seen in our earnings performance and delivered an interim dividend of 15 cents for our Co-op’s farmer shareholders and unit holders, up from 10 cents this time last year,” he said.
“The forecast Farmgate Milk Price has also lifted recently, with a current midpoint of $7.80 per kg MS (milk solids), following volatility earlier in the season.
“While supply and demand dynamics remain finely balanced, with continuing global uncertainty, we are now well progressed through the season. This gives us the confidence to narrow our forecast Farmgate Milk Price range to $7.50 – $8.10 per kilogram MS.
Mr Hurrell said Fonterra’s economic balance sheet showed a balance between the higher sales and margins on one hand, and lower returns in its ‘ingredients’ channel, which had followed historically high price relativities in the previous year.
He added that when it came to the company’s ‘global markets’ channel, there had also been a profit rise from $230 million to $380 million after tax, but that Fonterra Australia’s performance had been hit by the higher milk prices in Australia.
“In February, we announced plans to merge our Australia and Fonterra Brands New Zealand businesses from 1 May,” he said
“These two units share many similarities, and we expect the integration to create scale efficiencies.”
Fonterra shares have jumped 0.59 percent this morning, trading at $3.41c at 11:09 AEDT.