Fonterra has announced a notable improvement in its financial performance for the first half of the year, with an 8% increase in net profit to $729 million. The co-op’s operating profit also rose by 16% to $1.1 billion.
Fonterra has increased its interim dividend to 22 cents per share, up from 15 cents in the previous comparable period.
The forecast farmgate milk price range for the current season has been adjusted from $9.50-$10.50 per kg of milk solids to $9.70-$10.30, maintaining a midpoint of $10.00/kg.
Fonterra chief executive Miles Hurrell emphasised that the company is prioritising value creation while striving for the highest sustainable farmgate milk price.
He added, “We’re looking ahead as we implement our strategy and continue to invest for the future.”
The company is said to have started projects that will enhance the manufacturing production capacity of Fonterra’s Ingredients and Foodservice channels. Works are also underway at the Studholme site to increase high-value protein production and at Edendale for the construction of a new UHT cream plant.
Fonterra’s Ingredients channel experienced a 3.9% decrease in sales volume and a $229 million increase in operating profit, reaching $696 million.
Meanwhile, the company’s Foodservice business witnessed an 8.3% sales volume growth “with Q2 gross margins significantly up on Q1 as pricing adjusted to the higher milk price.”
The Foodservice channel also reported an operating profit of $230 million. Although this figure is lower than the record $342 million achieved in the previous fiscal year, it remains strong considering the higher input costs faced during this period.
New funding for farmers with lower emissions milk and fixed milk price expansion programme have also been introduced. According to Fonterra, the latter is designed to provide farmers with greater certainty regarding the farmgate milk price.
Chief executive Hurrell said Fonterra is performing exceptionally well, with increases in milk collections, the forecast farmgate milk price, and earnings performance compared to the same period last year.
“As we look to the balance of the year ahead, we’re focused on maintaining this momentum in performance, while progressing delivery of our strategy, including the dual-track consumer divestment process which is on track as planned.”