Fonterra, the world's largest dairy co-operative, has posted a revenue increase of 5% to NZD 9.2 billion in the first half of its financial year, according to the group's interim results.
Net profit after tax was up 2% at the firm, to NZD 418 million, with normalised EBIT down 9% to NZD 607 million.
Its growing Consumer and Foodservice business saw its normalised EBIT up 30% to NZD 313 million, with the group saying it moved an additional 227 million Liquid Milk Equivalent (LME) of milk into its Consumer and Foodservice products.
“The Co-operative continues to get stronger," said Fonterra chairman John Wilson. "We have further reduced net debt which is down $793 million or 11%, and we have a gearing ratio of 46.6% compared with 49.2% in the first half of 2016.
“Fonterra’s strong balance sheet means we are well placed to develop our markets and position our co-operative for the future.”
The firm said that milk collection in New Zealand was down 54 million kgMS on the same period last year, due to poor spring weather, however the group expects this to rise in the second half of the year due to good rainfall in autumn.
However, Fonterra noted that it is still having to deal with world milk price volatility, as experienced over the past year.
“We see some challenges and opportunities ahead in the second half," added Wilson. The additional milk at the end of the season is welcome for our farmers and our management team are focused on ensuring that we get the highest value from this milk.
“The impact of more volatility in product stream returns in our Ingredients business, some tightening of margins in the coming months, and the potential for extra milk in the autumn could result in some pressure on our earnings in the second half."
He added that he was confident that Fonterra could "keep up its momentum" in the second half of the year.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.