Thursday, 14 September 2023 07:55

Dairy company returns churn!

Written by  Leo Argent
Fonterra fell from sixth to ninth place last year in the revenue ranking of the world’s top dairy companies. Fonterra fell from sixth to ninth place last year in the revenue ranking of the world’s top dairy companies.

Revenue performances of the world’s leading dairy companies has shown a major reshuffling over the last year, with Fonterra falling from sixth to ninth place amidst other companies shifting positions.

According to the 2023 Rabobank Global Dairy Top 20 report, only five of the Top 20 companies retained the same positions as last year, with French company Lactalis maintaining the top spot — while Dairy Farmers of America (US) moved up to second place, pushing Nestlé (Switzerland) into third.

A stronger US dollar and unfavourable reporting of the NZ dollar influenced position changes in the ranking – with the combined turnover of the Top 20 companies jumping 7.4% in US dollar terms. Fuelled by a second round of warinduced inflation, EU dairy product prices rallied to new annual average highs. This followed the prior year’s gain of 9.3%.

Rabobank dairy analyst Richard Scheper said overall, year-on-year average price gains in butter, cheese, milk powders and other dairy products set the stage for double-digit turnover growth in local currencies in 2022. However, he added most turnover gains were absorbed by exploding costs, leaving little on the companies’ bottom lines.

“Many dairy companies paid record-high average farmgate milk prices to offset large farm input costs. At the factory gate, rising energy costs and the availability of natural gas – especially in Europe – were the largest concerns for energy-intensive dairy processing. Costs for other components, such as logistics, packaging materials, and labour, also escalated in 2022.”

The report says that in Oceania and the US, milk powder prices were also elevated, but failed to exceed 2013’s record levels. At the same time, lower-than-anticipated milk production growth in the main exporting regions and decent domestic demand contributed to an overall tight dairy market with limited exportable surpluses during most of 2022.

Fonterra’s slip is partly explained by the continuing disposal of non-core assets while adjusting to pressure on milk volume growth, as well as the unfavourable NZ dollar.

The co-operative sold its Chilean subsidiary Soprole in early 2023, resulting in an estimated drop in revenue of about US $800m. Fonterra’s planned sale to Lactalis of DPA Brazil, a joint venture with Nestlé, is still pending.

More like this

Fonterra's opportunities, risks

At Fonterra's recent annual meeting in New Plymouth, chair Peter McBride spoke on the co-op's changing global operating context and how to manage risk. Here's some of what he said.

Outflanked

OPINION: Greenpeace tried its best to disrupt Fonterra’s annual meeting at a hotel in New Plymouth earlier this month, but they were outflanked by a formidable team of Fonterra staff, security officers and Taranaki police.

Featured

New Image turns 40!

Auckland manufacturer and distributor of colostrum-based supplements, New Image International, celebrated its 40th anniversary this month.

National

Winter grazing warning

Every time people from overseas see photographs of cows up to their hocks in mud it's bad for New Zealand.

ANZ defends farm lending rates

The country's largest lender to the agriculture sector says it's not favouring home loans over farm and business lending.

Machinery & Products

Expo set to wow again

Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo…

A year of global challenges

As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make…

» Latest Print Issues Online

The Hound

Review SOEs!

OPINION: NIWA has long weathered complaints about alleged stifling of competition in forecasting, and more recently, claims of lack of…

Bank reset

OPINION: Adding to calls to get banks to 'back off', NZ Agri Brokers director Andrew Laming has revealed that the…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter