Fonterra turns Australian results around
New Zealand dairy company, Fonterra, has announced its 2016 financial year results, reporting turnarounds for its Australian investments.
In March 2016, Fonterra described its half yearly results for Australia as “not satisfactory” but late last week it said its Australian results had improved after taking several measures.
Reflecting on the second-half of the financial year Fonterra said it returned its Australian operations to profitability by taking out costs, reducing working capital and divesting non-core business assets, including shares in Bega Cheese and Dairy technology Services.
Overall profits increase
Fonterra reported an overall net profit of NZ $834 million, an increase of 65 per cent on its results for its 2015 financial year.
Chairman of Fonterra, John Wilson, said the 2015/16 season has been incredibly difficult for farmers with global dairy prices at unstainable prices.
“Our Co-operative has responded. We continued with the significant and necessary changes we began in the business over three years ago to support our strategy and its priorities, and worked hard to return every possible cent of value back to our farmers,” Wilson said.
“Our business strategy is serving us well. We are moving more milk into higher-returning consumer and foodservice products while securing sustainable ingredients margins over the GlobalDairyTrade benchmarks, especially through speciality ingredients and service offerings.”
Wilson said Fonterra has done what it can to support its farmers with Co-operative Support Loans.
“After a period of deliberate and disciplined attention to the business, we have become a stronger Co-operative operationally, financially and in our mindset with a clear sense of direction and a structure which will support real momentum in our strategy going forward,” Wilson said.
Wilson said over the past three years the Co-operative had worked hard to align its structure to its strategy with a focus on achieving more value for the volumes of milk produced by its farmers.
“The higher forecast earnings per share range reflects the performance improvements the business will continue making,” he said.
“It is still early in the season, and we expect continuing volatility as reflected in price improvements in recent Global Dairy Trade auctions. Current global milk prices remain at unrealistically low levels, but as the signs in the market improve, we are very strongly positioned to build on a good result in the year to come,” Wilson concluded.