Fonterra Reports Over $1B Profit Amid Decreased Earnings, Raises Forecast Milk Payout
Key financial figures (12 months ended July vs. prior year):
- Net profit: $1.17b vs $1.6b (from continuing operations)
- Revenue: $23.0b vs $26.1b
- Earnings per share: 67 cents vs 95 cents
- Net debt: $2.6b vs $3.2b
- Milk payout: $7.83 per kgMS vs $8.22 per kgMS
- Forecast payout (2024/25): Midpoint $9 per kgMS
- Final dividend: 55 cents per share vs 50 cents
CEO Miles Hurrell attributed the dip in profit to reduced tailwinds from business divestments and high prices experienced in the previous year. However, he emphasized the company's continued strong performance: "We've maintained positive momentum and delivered earnings at the top end of our forecast range."
Increased Milk Payout
Fonterra increased its farmgate milk price forecast for the 2024/25 season to a midpoint of $9 per kilogram of milk solids (kgMS), within a range of $8.25 to $9.75 per kgMS. For the recently concluded season, the payout stood at $7.83 per kgMS, with dividends bringing the total cash payout to $8.38.
Strategic Review and Future Outlook
Fonterra is currently reviewing its business, which may lead to the divestment of its consumer brands, including Anchor and Mainland, as well as its operations in Sri Lanka and Australia. Despite this, Hurrell highlighted that these businesses are performing well and the company seeks to maximize value for farmer shareholders.
Additionally, Fonterra announced $375 million in new investments across its facilities this year, while also closing parts of some factories in Waikato and outsourcing jobs to India. A revised business strategy with a "sharper focus" on core strengths will be unveiled next week.
