Fonterra has posted $659 million profit after tax for the 2020 financial year, up $1.3 billion on last year’s result.
The dairy giant announced a dividend for the financial year of 5 cents per share and a final Farmgate Milk Price for the 2019-20 season of $7.14 per kilogram of milksolids.
Fonterra chairman John Monaghan says for a 100% share backed farm, this gave them a final cash payout of $7.19 per kgMS.
“This year marks a return to paying dividends, a position we expect to maintain in the future, assuming normal operating conditions.
“At 5 cents per share, the dividend is at the lower end of the 5-7 cent range calculated under the Board’s dividend policy guidelines.
“In the context of so much uncertainty, as COVID-19 continues to impact our key markets and customer confidence, distributing a 5-cent dividend is a prudent decision and one that balances our aims of further reducing debt and distributing earnings,” Monaghan says.
Fonterra chief executive Miles Hurrell says 2019/20 was a good year for the co-op with profit up, debt down and a strong milk price.
“I’m proud of how farmers and employees have come together to deliver these strong results in a challenging environment. They have had to juggle the extra demands and stress of COVID-19 and have gone above and beyond. I would like to thank them for their hard work and support.
“This time last year we were announcing our new strategy and customer-led operating model. We were clear that to build a sustainable future we needed to focus on three interconnected goals – healthy people, a healthy environment and a healthy business.
“We went on to deliver a strong performance for the first half. However, what none of us could have ever predicted was what then played out – a world facing COVID-19. The flow-on effects of the pandemic did impact our performance in the second half, particularly in our consumer and foodservice businesses,” Hurrell says.
He says the main drivers of the underlying business performance was a strong normalised gross profit in the ingredients business and, although there was the disruption from COVID-19, the strong sales and gross margins from the Greater China Foodservice business in the first half of the year.
“We have seen significant growth across the Anchor Food Professional product range in China. We have entered 50 new cities across China, taking our total to 350, and our products are now not only being used in Western style restaurants and bakeries but also those serving local cuisine.
“However, as per our guidance in our third quarter business update, our Foodservice businesses across Asia, Oceania and Latin America were impacted by COVID-19 in the fourth quarter. All three markets reported losses in the second half,” Hurrell says.
Fonterra has announced a 2020/21 earnings guidance range of 20-35 cents per share and has also reaffirmed its 2020/21 forecast Farmgate Milk Price range of $5.90-$6.90 per kgMS.
