In May, Fonterra reported a positive long-term outlook despite geopolitical and Covid-19-related events impacting global demand in the short-term.

“On the supply side, growth from key milk producing regions is expected to remain constrained as high feed, fertiliser and energy costs continue to impact production volumes,” said Hurrell.

“These demand and supply dynamics are expected to support dairy prices in the medium to long-term.

“However, we are operating in an increasingly volatile global environment and are managing a wider range of risks than usual.

“This includes the potential for further impacts from COVID-19, financial markets and foreign exchange volatility, global inflationary pressures, a tightening labour market, increasing interest rates, geopolitical events, as well as the possible impact on demand from higher dairy prices.”

For the nine months ending 30 April 2022, Fonterra’s sales volumes were down as a result of lower milk collections and the timing of sales due to short-term impacts on demand including the lockdowns in China, the economic crisis in Sri Lanka and the Russia-Ukraine conflict.

Earnings before interest and tax for the reported period was $825 million, down $134 million reflecting lower sales volumes, Covid-19 disruption, the rapid decline of the Sri Lankan Rupee and continued pressure on margins from higher milk prices.

Profit after tax was $472 million, down $115 million, while reported profit after tax was $472 million, down $131 million.

Hurrell said despite significant market disruption, the co-op continued to deliver a strong milk price and solid earnings.

“As an exporter, many of the markets we operate in have been prone to sudden shocks, which can impact what we sell, where we sell it and when, but right now we’re feeling the impact of multiple events across multiple markets,” he said.

“We are actively managing the challenges arising from Covid-19 and other geopolitical and macroeconomic events. However, increasing market volatility and uncertainty, on-going supply chain disruptions and growing inflationary pressures have added increased complexity.”