Fonterra has reported an interim half-year profit after tax of $729 million, up 8% on the previous year.
Chief executive Miles Hurrell said that equated to earnings of 44 cents per share, and the dairy co-operative would pay an interim dividend of 22cps.
Fonterra has told farmers it is committed to delivering the highest sustainable milk price possible, and is working towards simplifying by selling off its consumer businesses, which include brands like Anchor, Kapiti and Mainland, as part of a programme designed to improve returns for its farmer-shareholders.
For the current season, the forecast farmgate milk price range is narrowing from $9.50 to $10.50 per kg of milk solids to $9.70 to $10.30 per kg of milk solids, although the midpoint remained $10.
Fonterra has embarked on a series of roadshows with investors that might be interested in buying its consumer brand businesses.
The combined consumer business is being shopped around under the name Mainland Group, and investors are being told the combined assets had an annual revenue of $4.9 billion in its last financial year.
Hurrell said: “We’re looking ahead as we implement our strategy and continue to invest for the future.”
“We have commenced projects to unlock manufacturing production capacity for our Ingredients and Foodservice channels, with site works now underway at Studholme for high-value protein capacity and at Edendale for a new UHT cream plant,” he said.
He said work was under way on a new Whareroa coolstore and plans for decarbonisation projects at Clandeboye, Edendale, Edgecumbe and Whareroa to secure energy supply and reduce Fonterra’s emissions.
In December, Fonterra partnered with multi-national food giant Nestlé to begin a new funding programme delivering a higher milk price for farmers with lower emissions milk.
Hurrell said Fonterra had made changes to its advance rate schedule to get cash to farmers sooner.
It’s shaping up to be a big production year on dairy farms. Fonterra’s forecast milk collections for the year are up 2.7% on this time last year to 1.51 billion kg of milk solids.
“This follows favourable pasture growth across most of New Zealand earlier in the season,” said Hurrell.
However, he said some parts of the country were now experiencing very dry conditions.
Fonterra’s Ingredients channel saw operating profit up $229m to $696m.
Its Foodservice channel reported an operating profit of $230m, compared with the record high of $342m in the first half of its last financial year.
Its Consumer channel delivered a flat operating profit.
Hurrell said Fonterra’s six-year $450m to $500m IT and digital transformation project was progressing well and remained on budget.
Hurrell said: “We have recently increased Fonterra’s FY25 full year forecast earnings range to 55-75 cents per share.”
That did not, however, take into account forecast costs from selling off its Consumer business.
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