News Dairy
Profit dairy giant Fonterra almost doubled
Fonterra has achieved an excellent result in the first quarter of the broken financial year 2022/23. Profits almost collapsed and the members of the cooperative benefit from this through an increased dividend forecast. The milk price has been reduced now that dairy market prices are under pressure.
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
Operating profit before interest and tax rose by a whopping 94% to NZ$368 million in the first quarter (August to October) compared to the same period last year. This left NZ$214 million in net profit, an increase of 84%. In their own words, the results are a result of the shortage on the world dairy market and the high prices that go with it.
In the meantime, sentiment has turned. For example, the sales opportunities for whole milk powder have shrunk considerably, Fonterra indicates. China in particular is buying less. This puts pressure on milk powder prices, but butter and cheese prices are also in a downward spiral. Fonterra is therefore adjusting the milk price forecast for the current season that ends next July. The latest forecast assumes a milk price between NZ $8,50 and NZ $9,50 per kilo of milk solids. This means a mid price of NZ$9, which is fractionally lower than last year's payout price. However, the season is still long, which means that anything can still happen.
Higher performance price
Remarkably, the expected performance price for the current season is currently higher than last year. This is related to Fonterra's good financial performance. As a result, the expected dividend has been increased. This is now estimated in a range between $0,50 and $0,70 per share.