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Fonterra is much better in skin after major reorganization
New Zealand's Fonterra is still reaping the benefits of the large-scale reorganization that was implemented more than 3 years ago. The profit is again higher than last year and the milk price reached its highest point since 2016. All despite corona.
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The members in New Zealand received a total milk price of NZ $7,76 per kilo of Milk Solids, which converts to an amount of €35,42 per 100 kilos of milk. A top prize by New Zealand standards, and one that has not been received for a long time.
Record export
The good price is the result of strong demand for dairy products. Mainly from China, but also the rest of Asia. According to some sources, milk production seemed to lag slightly behind, but Fonterra's total milk production still amounted to 17,1 billion litres, 200 million liters more than the year before. In addition, a record amount of 2,9 million tons of dairy was exported, despite the corona pandemic.
Meanwhile, Fonterra continued to steadily strengthen the business. The burden of financial obligations was reduced by €525 million to approximately €2,9 billion, or 35,5% of the balance sheet total. The Chinese dairy farms and the share in Beingmate sold more favorably than first expected.
Divestment of Chilean activities
The next step is the divestment of the dairy activities in Chile. In addition, a partial sale of the interest in the Australian activities is being considered. In New Zealand, work is underway on a different capital structure for the cooperative, but the company will remain 'firmly in farmer hands', CEO Miles Hurrell and chairman Peter McBride assure.
Like many other dairy companies, Fonterra still has to work hard on sustainability. Many factories are still coal-fired and need to switch to another energy source. This will significantly reduce CO2 emissions. A lot of energy and money will also be invested in a healthier and more climate-friendly product range. Fonterra wants to invest almost €100 million annually in research and innovation. €36 million of this will go towards the development of nutrition for a healthy lifestyle.