Medals galore for Fonterra cheeses
Fonterra cheeses are continuing their golden run at the annual New Zealand Cheese Awards.
Fonterra has announced its half-year results, with net profit down 7% to $364 million.
The co-operative is attributing the $27m drop, compared to last year, to a higher milk price and market disruptions caused by Covid.
The co-op has also announced an interim dividend of 5c/share and is sticking with its record forecast farmgate milk price range of $9.30 to $9.90/kgMS for the season.
Fonterra chief executive Miles Hurrell says the co-op’s results for the first half of the financial year show it is performing well, while creating the momentum needed to achieve its 2030 targets.
“The world wants nutritious, sustainably produced dairy and that’s what we do well.
“We have continued to see strong demand for our products across multiple markets at a time of constrained supply.
“Our earnings have been achieved at a time when our input costs have been significantly higher with the average cost of milk up almost 30% on the same time last year.
“This shows we’re performing well even with a high Farmgate Milk Price.”
Hurrell says the board’s decision to pay an interim dividend will be welcome news for unit holders and farmer owners.
“The milk price is also good news for our farmer owners and the New Zealand economy. A midpoint of $9.60 would see the co-op inject over $14 billion into our local communities through milk price payments alone.”
Covid continues to be a challenge for Fonterra, both overseas and at home.
“We’re seeing more of our employees having to isolate and continued disruptions in our supply chain,” he says.
“However, by caring for our people and good management and planning, our manufacturing plants have continued to operate and we are getting products to our customers.”
Hurrell says the drop in net profit reflects the effects of significantly higher milk price.
“Margins in our Ingredients channel improved in the first half.
“However, the higher milk price put pressure on our margins in Foodservice and Consumer, and we also felt the impact of Covid-19 in many of our markets.
“Lower New Zealand milk collections reduced our total production and this impacted our overall sales volumes.”
Key results
Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.
Shipping disruption caused by Houthi rebels in the Red Sea has so far not impacted fertiliser prices or supply on farm.
The opportunity to spend more time on farm while providing a dedicated service for shareholders attracted new environmental manager Ben Howden to work for Waimakariri Irrigation Limited (WIL).
Federated Farmers claims that the Otago Regional Council is charging ahead unnecessarily with piling more regulation on rural communities.
Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.
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