Fonterra, the world’s largest dairy exporter, has more than doubled its net profit despite the global fall in milk prices.
As the Business Spectator reports, the Auckland-based dairy cooperative increased net profit for the six months to January 31 to $NZ409 million ($537 million). This a 123.5 per cent increase compared to the corresponding period last year.
Other positives included a 27 per cent gain in first-half normalised earnings before interest and tax for ingredients to $NZ617 million; and a 108 per cent increase in Ebit for higher-value consumer and food service products.
Fonterra chairman John Wilson noted that the state of the global market had negatively affected farmers’ incomes. In response, he said, Fonterra had focussed on higher value and more profitable products.
“The low prices have placed a great deal of pressure on incomes, farm budgets and our farming families,” Wilson said in a statement.
“Our priority is to generate more value out of our farmers’ milk by focusing on the areas within our control.”
“We aim to efficiently convert as much milk as possible into the highest returning products.”
As the SMH reports, the company described the performance of its Australian ingredients business as “still not satisfactory”, after its gross margin dropped by 25 per cent to $NZ9 million.
The company said the European Union’s dairy industry should revert to 1 per cent annual growth through 2016 and this should help increase the global price of whole milk powder.