Fonterra has delivered “reported” profit after tax of $583 million for its financial year result.
This was down 3% for the year ending July 31 while total group revenue was up 11% to $23.4 billion.
The results were on the back of a final farmgate milk price for the season of $9.30 per kg of milk solids.
The co-operative delivered a total dividend of 20 cents per share to its fully shared-up farmers – comprising of an interim dividend of 5 cents per share and a final dividend of 15 cents per share.
Chief executive Miles Hurrell says despite the challenges including increased costs associated with supply chain volatility, 2021/22 was a good year for the business.
“These results demonstrate that our decisions relating to product mix, market diversification, quality products and resilient supply chain, mean the co-op is able to deliver both a strong milk price and robust financial performance in a tough global operating environment.
“The co-op is pleased to be able to pay a total dividend of 20 cents per share for our farmer owners and unit holders. And this year’s higher farmgate milk price is the strongest it has ever been, which is great news for our farmers. New Zealand also benefits from this, with $13.7 billion returned into the economy in milk price payments alone this year.
“Importantly, one year on, the co-op is making tangible progress against our strategy – namely to focus on New Zealand milk, be a leader in sustainability and a leader in dairy innovation and science,” Hurrell says.
Despite tight supply there was strong demand from global customers for dairy, which helped Fonterra’s strong milk price and financial performance.
A series of geopolitical and economic events impacted its performance – including a $80 million adverse revaluation of the co-op’s Sri Lankan business payables, due to the devaluation of the rupee.
The company also reports higher inventory than usual at the end of the 2022 financial year due to stronger milk collections towards the end of the season coinciding with factory constraints, short-term impacts on demand and shipping disruptions.
“We continue to believe that New Zealand milk is the highest quality and most sought-after milk in the world,” Hurrell says.
“Our milk has a carbon footprint, one third the global average for milk production due to our grass-fed farming model. Pleasingly, the co-op has maintained its share of the New Zealand milk supply market in a very competitive market.”
FY23 outlook
Fonterra has announced a forecast 2022/23 farmgate milk price range of NZ$8.50–$10.00 per kgMS, with a midpoint of NZ$9.25 per kgMS. It also forecasts 2023 normalised earnings guidance of 45-60 cents per share.
“The longer-term outlook for dairy remains positive. And in the medium-term, we expect to see an easing in some of the geopolitical events, namely the COVID-19 lockdowns in China and the economic challenges in Sri Lanka.
“We continue to monitor a number of risks. The strength of our balance sheet means we remain in a strong position to weather uncertainty and market volatility,” Hurrell says.
