Record results for Fonterra, despite profit drop in Australia
Dairy multinational co-operative Fonterra has announced a record-breaking year in profits, despite its consumer business profits in New Zealand and Australia dropping.
Fonterra’s revenue for the year ended July 31 was NZ$19.9 billion, a 19 per cent increase on the previous year.
The dairy giant announced a payout of NZ$8.251 per kilogram, before retentions, comprising a farm gate milk price of NZ$7.60 per kilogram of milk solids for the year ended 31 July 2011. The payout is NZ$1.55 ahead of the prior period’s NZ$6.70 and exceeds Fonterra’s previous record of NZ$7.90 achieved in 2008.
Despite the record financial results, Fonterra Australia-New Zealand, a subsidiary of Fonterra, saw its earnings fall 17 per cent during the 2010/11 financial year.
Fonterra’s Chief Executive Andrew Ferrier said that Australia-New Zealand business’ margins were tightened due to a “fiercely competitive market environment making it harder to reflect fully higher commodity prices in consumer pricing”.
Mr Ferrier said, “Focus on higher margin products in Australia like cheese, butter and yoghurt has helped the business support profitability. The Australia-New Zealand segment includes a division that collects milk from Australian farmers and manufactures dairy ingredients primarily for the export market.
“Given its primary exposure to mature markets and the particularly difficult conditions this year, Australia-New Zealand has done well relative to some of its peers in Australia and New Zealand,” Mr Ferrier said.