Fonterra Co-operative’s net profit after tax for FY24 is NZ$1.2 billion, down from $1.6 billion last year. Its earnings before interest and tax (EBIT) was $1.6 billion. Its final farmgate milk price as $7.83 per kgMS.
CEO Miles Hurrell said earnings were driven by higher margins and increased sales volumes in its Foodservice and Consumer channels. Its Ingredients channel delivered strong returns, but were down on the record result in FY23.
Snapshot
- profit after tax: NZ $1,168m;
- continuing operations EBIT*: NZ $1,560m;
- continuing operations earnings* per share: 70 cents per share;
- return on capital: 11.3%;
- total dividend: 55 cents per share, comprising:
- 15 cent interim and 25 cent final dividend;
- 15 cent special dividend;
- full year milk collections: 1,471 million kgMS; and
- final 2023/24 season Farmgate Milk Price: NZ$7.83 per kgMS.
Its dividend payout reflected the co-op’s strong earnings performance and its long-term resilience, he said.
“Our total dividend of 55 cents per share is the second largest since Fonterra was formed. It includes a 15-cent interim dividend and a 25 cent final dividend driven by strong FY24 earnings,” Hurrell said.
“In addition, our capital management efficiency and ongoing balance sheet strength have enabled us to return an extra 15 cents per share to farmer shareholders and unit holders through a special dividend.
“The final farmgate milk price for the 2023/24 season finished at $7.83 per kgMS. This, combined with the 55 cents per share dividend, provides a total cash payout to a fully shared up farmer of $8.38 per kgMS,” he said.
Sales volumes from continuing operations were down one per cent to 3,470 kMT and gross margins were maintained at 17 per cent.
Hurrell said the business focus was on its efficiency metrics and investing to improve long-term performance and resilience.
Core operations manufacturing costs per kgMS reduced year-on-year by two per cent to $2.58 per kgMS, but cash operating expenses were up due to IT investment and digital transformation projects.
In May the co-op announced it was looking to divest its global Consumer business, as well as Fonterra Oceania and Sri Lanka. Hurrell said advisers have been appointed to assess its options. This followed the merging of two business units, Fonterra Brands New Zealand and Fonterra Australia, to form Fonterra Oceania.
“Over the last few months, we have appointed advisors to assist with assessing divestment options for our Consumer businesses and this work is ongoing,” says Mr Hurrell.
The co-op also appointed a new chief operating officer, CFO, and restructured the senior executive this year.
It announced investments in foodtech through partnerships with Nourish Ingredients and Superbrewed Food to create new income streams from milk.
It also announced a $75 million investment in its Studholme site to expand its protein ingredients business, and $150 million in a new UHT cream processing plant at its Edendale site.
