Fonterra is reporting a profit after tax of $1.6 billion for its full-year result, up 170% on the previous year.
It included earnings of 95 cents per share for the 12 months to July 31, up from 36 cents per share.
The co-operative reported a final 2022/23 season farmgate milk price of $8.22 per kilogram of milk solids.
Chief executive Miles Hurrell says the co-op delivered strong earnings and made progress against key strategic initiatives in FY23, however this has been against the backdrop of a farmgate milk price that has dropped across the season.
“Our 2022/23 season farmgate milk price was impacted by reduced demand for whole milk powder from key importing regions.
“As the financial year progressed, we saw global dairy trade prices drop, with the average whole milk powder price down 16% compared to last season,” Hurrell says.
“We recognise the impact the reduced farmgate milk price has on farmers’ businesses and have utilised our strong balance sheet to introduce a new advance rate schedule guideline to assist on-farm cash flow.”
Hurrell says favourable margins in the ingredients channel, in particular the cheese and protein portfolios, helped the co-op deliver a strong financial result.
“We also saw improved performance in our foodservice channel due to increased product pricing and higher demand as Greater China’s lockdown restrictions started to ease from the start of calendar year 2023.”
Looking ahead, Fonterra is forecasting a 2023/24 farmgate milk price range of $6 – $7.50 per kgMS, with a midpoint of $6.75, reflecting reduced demand for whole milk powder from key importing regions.
“We are watching market dynamics closely and there are indications demand for New Zealand milk powders will start to return from early 2024. Demand for other products, including foodservice and our value-added ingredients, continues to be robust,” Hurrell says.
“Our FY24 forecast earnings range for continuing operations is 45-60 cents per share. While the favourable price relativities we’ve experienced across FY23 have reduced from their peaks, we are forecasting improved margins across our consumer and foodservice channels for FY24.
“We acknowledge that across the year, farmers will continue to feel the pressure from high input costs and a reduced farmgate milk price. We’ll continue to do all that we can to support farmers through this challenging period,” Hurrell says.
