Fonterra has posted “reported” profit after tax of $599 million for its 2021 financial year.
Chief executive Miles Hurrell says while down $60m on the previous year the co-operative is still pleased with the result.
The 2020 financial year benefited significantly from the divestments of DFE Pharma and foodspring.
“Normalised” profit after tax grew by $190 million to $588 million, driven by improved earnings and lower interest expense.
Total group normalised EBIT, which reflects underlying business performance, was up 8% to $952m, with total group normalised operating expenditure down 3% to $2.2b. Net debt is down by $872m to $3.8b.
The co-operative saw a total pay-out of $7.74 per kg of milk solids for the season and announced a dividend of 15c a share, taking the total to 20c.
“Our sales book is well balanced across the regions and a number of our markets have performed well,” Hurrell says.
“In Asia Pacific, significant improvements in our foodservice and consumer channels have pushed normalised EBIT up 28% to $305 million. We’ve expanded our Foodservice footprint in the region and are seeing the benefits of that.
“Here – like in many of our markets – COVID-19 has changed consumer behaviour, with people choosing to cook at home.
“That’s really benefited our consumer brands and supported upward momentum in our consumer channel performance, particularly in New Zealand and Australia.
“Greater China continues to be an important market for us, with normalised EBIT up 10% to $403 million. This speaks to the strength of our foodservice channel, China’s dynamic economy and its love for dairy.
“Africa, Middle East, Europe, North Asia, Americas’ (AMENA) normalised EBIT was down 28% to $336 million, reflecting our strategy of redirecting product into higher-margin markets. However, we have seen improvements in our foodservice and consumer channels within the region, including a turnaround for our Chilean business”
Carbon emissions
Hurrell says the co-op is also proud of its carbon reduction progress and New Zealand dairy having the lowest carbon footprint in the world.
It is aiming towards net zero carbon by 2050 and over the next decade it intends to invest around $1b in reducing carbon emissions and improving water efficiency and treatment at its manufacturing sites.
“This year, we reduced our carbon emissions from coal by more than 11%, as Te Awamutu completed its first season using renewable wood pellets.
“We also recently announced our Stirling site will move to renewable energy from August next year.
“Our farmer owners are also doing their bit, with record numbers achieving the top level of our co-operative difference framework and 53% of supplying farms now having a Farm Environment Plan. That’s good for the environment and it’s also what our customers expect,” he says.
Hurrell says the strong milk price is likely to continue and that is good news for farmers and the New Zealand economy.
He says the impact of COVID-19 continues to be felt, particularly across the supply chain.
“We expect competitive tension in the global shipping market to continue this financial year.
“We have largely been able to mitigate this thanks to the strength of our Kotahi partnership which has allowed us to keep our product moving through the supply chain.”
