Fonterra Co-operative Group, headquartered in New Zealand, posted a significant first-half profit increase, driven by higher profits and improved sales across products and categories The company announced a surprise dividend to shareholders at the same time.
Fonterra profit skyrockets
According to Fonterra, revenues from consumer and food businesses experienced a notable improvement from improved pricing strategies and sales volumes, but ingredients faced challenges due to high historic commodity price movements in the previous year.
Following the announcement, Fonterra’s shareholders’ portfolio rose as much as 2.8% at 2331 GMT, with the company’s shares up 2.1% in contrast to the broader benchmark S&P/NZX 50 index, which saw a slight decline of 0.2%.
Looking ahead, Fonterra painted a slightly more pessimistic picture for the second half of the year, forecasting further strengthening of overall profit margins across products, food services and consumer services This strictness stemmed from the recent rise in milk prices for farmers.
Fonterra also revised its farmgate milk price forecast for FY2024, reducing it to NZ$7.30-nazid$8.30 per kilogram (kg) of milk cup.
CEO Miles Hurrell emphasized the company’s cautious stance, acknowledging the possibility of further volatility, particularly due to geopolitical instability, despite the easing of global inflationary pressures
In addition, the company announced a short-term dividend increase of 15 NZ cents (€0.08) per share, representing a significant increase of 50% from 10 NZ cents (€0.06) per share last year
As the world’s largest dairy exporter, Fonterra posted an impressive after-tax profit of NZ$674 million (€370.70 million) in the six months ended January 31, representing significant growth from NZ$546 million (€300.30 million) reported in the same period one year ago.