Net profit soared 183% to $506m in the 12 months ended July 31.
Westpac senior economist Satish Ranchhod discusses the Fonterra result on NBR Radio and on demand on MyNBR Radio.
UPDATED 11am: Fonterra shifts product mix to reap bigger margins from smaller sales in 2015
EARLIER 9am: Fonterra Cooperative Group [NZX: FCG] raised its forecast milk payout from a decade low after a jump in full-year profit boosted by improved returns from its consumer and food service businesses, and improved margins from ingredients.
The cooperative raised its forecast farmgate milk price to $4.60 per kilogram of milk solids, from $3.85/kgMS.
That will bring the total payout to farmers for the 2015/16 season to between $5 and $5.10/kgMS, including forecast earnings per share of 40-50c.
Fonterra has reduced its forecast for New Zealand production volumes for the current season "by at least 5%," the company says.
Net profit soared 183% to $506 million in the 12 months ended July 31, while normalised earnings before interest and tax climbed 94% to $974 million.
While total sales volumes rose 9% to 4.3 million tonnes, revenue dropped 15% to $18.8 billion.
The cash payout fell 45% to $4.65, including a farmgate milk price of $4.40/kgMS and a dividend of 25c a share.
Chairman John Wilson says profit growth was driven by a better second-half performance.
"The strengthening of performance in the second half resulted in normalised earnings before interest and tax almost doubling, with good growth in our consumer and foodservice businesses and the results of a major push in our ingredients business to offset low milk prices with improved margins," Mr Wilson says.
In the 2015 year, "falling global dairy prices due to a supply and demand imbalance impacted the milk price, while the dividend reflected higher funding costs following significant investment in capacity to support milk growth in New Zealand, essential investments in the key strategic market of China, and the costs of maintaining a higher advance rate through the season."
Mr Wilson says the lift in profitability in the second half of the financial year was expected to carry through into the current financial year. However, chief executive Theo Spierings says this year is "one of the most difficult I've known."
"Looking ahead, this uncertainty means that world markets are likely to be difficult in the medium term," Mr Spierings says. "However, we will be more than ready when the market turns."
(BusinessDesk)
