Dairy giant Fonterra has reported a $391 million half-year profit, down 22 percent on the previous year's result, which was inflated by gains from asset sales.
Fonterra chief executive Miles Hurrell. Photo:
The co-operative's normalised profit, which excluded one-off items, was up 43 percent to $418m, as it offset slightly lower sales with higher margins and steady costs.
Fonterra has been selling assets, paying down debt, cutting costs and axing jobs over the past two years to turn around the business after major losses in 2019.
Chief executive Miles Hurrell said the result was "great" as the business had successfully coped with Covid-19, transport disruptions, and rising milk costs.
"Our standout performer continues to be Greater China. The team has delivered a 38 percent increase in normalised earnings ... reflecting the strength of our food service business in this region, improvements in our consumer business and China's strong economic recovery following the initial impact of Covid-19."
Its Asia-Pacific operations had benefited from increased consumer goods sales as people stayed home and cooked, but its other businesses around the world had seen a dip in sales.
Hurrell said shipping and supply chain disruptions should be fixed by the end of the year.
Photo: RNZ / Rebekah Parsons-King
Fonterra's financial recovery continued with a small reduction in its debt to $5.6bn, with the co-operative looking to sell more assets - two joint venture farms in China and the remaining 3 percent stake in the unsuccessful Chinese infant formula company Beingmate.
"Greater China continues to be one of our most important strategic markets. We remain committed to growing the value of our Greater China business, which we'll do by bringing the goodness of New Zealand milk to Chinese customers in innovative ways and partnering with local Chinese companies to do so."
Fonterra moved to restructure its business two years ago after posting hefty losses, and is now concentrating more on using the New Zealand milk supply to supply higher quality and high-value consumer products, rather than widespread global operations.
It will pay an interim dividend of 5 cents a share, and reaffirmed that its full year earnings forecast of 25-35 cents a share, and a farmgate milk payout of between $7.30 and $7.90 a kilo of milk solids.