Friday, 22 March 2024 15:38

Fonterra hails Aussie business despite earnings slump

Written by  Sudesh Kissun
Fonterra Australia managing director Rene Dedoncker. Fonterra Australia managing director Rene Dedoncker.

Fonterra is talking up the strength of its Australian business despite a 70% drop in half-year profit after tax.

The co-operative says the Australian business is strong with solid fundamentals despite a drop in earnings.

For six months ending January 31, Fonterra Australia reported a gross profit of $138 million, a 19% drop compared to the same period last year. Earnings before interest and taxes (EBIT) slumped 43% to $42m. Profit after tax nosedived, from $69m last year to $21m this year.

Fonterra collected 66m kgMS in the first half of this year, a 2% increase over last year.

Fonterra Australia managing director Rene Dedoncker says its Australian business remains profitable with good domestic demand.

“We continue to see value growth in Consumer and Foodservice.

“Our Consumer brands remain No.1 in the butter & spreads and cheese categories. This has been achieved despite a shift in consumer demand to private label and lower-price competitor products – which is only possible due to the strength of our brands.

“For Foodservice, out-of-home demand is subdued due to macro-economic conditions impacting household and business budgets. We remain focused on delivering an unrivalled customer experience, which has helped us to maintain our No.1 ranking in the Foodservice Advantage Survey for the fifth consecutive year.

“The financial performance of our Ingredients business is impacted when the milk price is high relative to commodity pricing. However, we are pleased to be growing our value-add proposition and have increased sales for our proteins, functional nutrition and probiotics.”

Dedoncker says the Australian market has been challenging for many dairy processors over the last 12 months.

“For Fonterra, our focus is on reducing our costs and improving return on capital. Work is well underway to identify and implement a range of initiatives which will deliver cost savings for our business,” Dedoncker says.

More like this

LCAs tackle false narratives

The quest to measure, report and make sense of the energy that goes into food production has come a long way in the past 25 years.

$3b windfall?

Fonterra's proposed sale of its global consumer business could fetch over $3 billion but not all proceeds will end up in the pockets of farmer shareholders.

Mixed legacy

OPINION: You're never as good as when you're dead, and with due respect to Theo Spierings' family, the Hound can't let the death of the former Fonterra CEO pass without mentioning the parlous state he left Fonterra in when he exited in 2018 - having pocketed well north of $30 million over seven years.

Featured

LCAs tackle false narratives

The quest to measure, report and make sense of the energy that goes into food production has come a long way in the past 25 years.

OSPRI's costly software upgrade

Animal disease management agency OSPRI has announced sweeping governance changes as it seeks to recover from the expensive failure of a major software project.

Organic sector backtracks on GE

Organics Aotearoa New Zealand (OANZ) says the Government’s new gene editing and genetic modification reforms could leave New Zealand as an outlier on the global stage.

$3b windfall?

Fonterra's proposed sale of its global consumer business could fetch over $3 billion but not all proceeds will end up in the pockets of farmer shareholders.

National

Food charity to hold online auction

Meat the Need, New Zealand’s dedicated charity delivering locally sourced protein meals to food-insecure communities, is launching an online National…

Machinery & Products

An ideal solution for larger farms

Designed specifically for large farms that want to drill with maximum flexibility, efficiency and power, the new Lemken Solitair ST…

Landpower increases its offering

Landpower and the Claas Harvest Centre network will launch the Claas Scorpion and Torion material handling solutions to the market…

» Latest Print Issues Online

The Hound

Leaky waka

OPINION: Was the ASB Economic Weekly throwing shade on Reserve Bank governor Adrian Orr when reporting on his speech in…

Know-it-alls

OPINION: A reader recently had a shot at the various armchair critics that she judged to be more than a…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter