Fonterra reports strong lift in profit
Chairman John Wilson said that the 2015/16 season had been incredibly difficult for farmers, their families and rural communities.
Fonterra, which has raised its forecast milk payout twice in as many months, posted a 74% gain in full-year profit as cost cutting and cheaper milk prices made up for a decline in sales.
Profit attributable to shareholders rose to $810 million in the 12 months ended July 31, from $466 million a year earlier, the company says.
Sales fell 9% to $17.2 billion while cost of goods sold, which is primarily made up of New Zealand sourced cost of milk, fell about 13% to $13.6 billion.
The latest annual results cover most of the 2015/16 season that chairman John Wilson described as "incredibly difficult for farmers, their families and rural communities, with global dairy prices at unsustainable levels.”
Since then the price of whole milk powder has gained about 38% to $US2782 a tonne, although that's still well below the high of $US5245 a tonne reached in April 2013. Mr Wilson says global milk prices are still too low.
"Global milk prices remain at unrealistically low levels, but as the signs in the market improve, we are very strongly positioned to build on a good result in the year to come," he says.
The cooperative's cash payout for the 2016 season was $4.30, made up of $3.90 per kilogram of milk solids and a dividend of 40c a share.
This week Fonterra raised its forecast payout for the current season by 50c/kgMS to $5.25/kgMS, for a total payout of $5.75-5.85 including forecast earnings of 50-60c.
The 2016 accounts show Fonterra trimmed its selling, marketing and distribution expenses and reduced its finance costs. Total borrowings reduced by $1.2 billion to $6.35 billion while the cooperative’s gearing ratio, measured as debt to debt plus equity, fell to 47% from 53%.
Units in the Fonterra Shareholders' Fund, which are entitled to dividend payments from the underlying shares, last traded at $5.93 and have gained 15% in the past 12 months, while the S&P/NZX 50 Index gained 28%.
They are rated a 'buy' based on the consensus of five analysts polled by Reuters.
Businessdesk
Staff Reporter
Thu, 22 Sep 2016
Thu, 22 Sep 2016
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Fonterra reports strong lift in profit
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