NEW ZEALAND- Fonterra, the prominent New Zealand dairy cooperative, has unveiled its financial results for the fiscal year ending on July 31, 2023, showcasing robust performance with a reported profit after tax amounting to US$952 million.

The cooperative’s FY23 earnings demonstrated remarkable growth, with reported earnings of 95 cents per share, a substantial increase from the 36 cents per share reported in the corresponding period of the previous year.

This impressive financial achievement marked a 170% rise in profit after tax compared to the previous year.

Fonterra’s CEO, Miles Hurrell, acknowledged that the final Farmgate Milk Price for the 2022/23 season, which stood at US$4.89 per kilogram of milk solids (kgMS), was affected by reduced demand from key importing regions.

He noted that the decline in prices was attributed to a 16% drop in the average whole milk powder price compared to the prior season.

Recognizing the impact of the reduced Farmgate Milk Price on farmers’ livelihoods, the cooperative utilized its strong financial position to introduce a new Advance Rate Schedule guideline aimed at assisting farmers with on-farm cash flow.

However, Fonterra remains committed to delivering value to its shareholders and unit holders, as reflected in a robust full-year dividend of 50 cents per share, comprising an interim dividend of 10 cents per share and a final dividend of 40 cents per share.

Hurrell highlighted that the cooperative had returned a tax-free 50 cents per share to shareholders and unit holders in August, following the divestment of Soprole.

This resulted in a final cash payout of NZD 9.22 (approximately US$5.49) per share backed kgMS to farmers.

Throughout the fiscal year, Fonterra executed strategic divestments, including Soprole and China Farms, as part of its focused approach to New Zealand milk.

Hurrell attributed these positive outcomes to various factors, including favourable margins in the ingredients channel, with particular strength in the cheese and protein portfolios.

Additionally, improved performance in the food service channel was noted, driven by increased product pricing and heightened demand as lockdown restrictions in Greater China began to ease at the beginning of the calendar year.

Despite challenges faced by farmers in New Zealand, including rising input costs and adverse weather events, Fonterra achieved full-year milk collections totaling 1,480 million kgMS.

Looking ahead, Fonterra has projected a Farmgate Milk Price range of NZD 6.00 (approximately US$3.57) to NZD 7.50 (approximately US$4.46) per kgMS for the 2023/24 season. The forecast earnings range for continuing operations is set at 45 to 60 cents per share.

Hurrell expressed optimism about market dynamics, anticipating that demand for New Zealand milk powders will begin to rebound from early 2024. Demand for other products, including foodservice and value-added ingredients, is expected to remain strong.

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