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18 Jan 2018 0:13
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  •   Home > News > Rural

    Fonterra profit falls 11 per cent for year

    Fonterra has posted an 11 per cent decline in full-year profit amid lower margins and an impairment on Beingmate Baby & Child Food.


    Fonterra has posted an 11 per cent decline in full-year profit as margins fell across its ingredients and consumer and food service divisions.

    The cooperative's profit was $745 million in the 12 months ended July 31 from $834 million a year earlier, the Auckland-based company announced on Monday.

    Sales rose to $19.2 billion from $17.2b while cost of sales climbed to about $16b from $13.6b.

    Rising prices offset a 3 per cent decline in volumes at 22.9b litres of milk equivalent.

    Normalised earnings before interest and tax dropped 15 per cent to $1.2b, which Fonterra said reflected "reduced margins across the business".

    The company affirmed its forecast 2017-18 payout of $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents.

    That makes the forecast total available payout $7.20 to $7.30, before retentions.

    The final cash payout was $6.52 for the 2016-17 season, for a 100 per cent share-backed farmer.

    "We will always need to manage variability across our cooperative - both in global markets and in our local farming conditions," chair John Wilson said.

    "We've demonstrated our ability to deal with those conditions and deliver on our strategy again this year."

    He said being able to maintain its forecast dividend "despite the milk price increasing by 57 per cent over the year and the impact of negative stream returns was an excellent result".

    The results include an impairment loss of $35m on Fonterra's investment in Beingmate, its distribution partner in China, reducing the carrying value to $617 million.

    "Throughout the year, Beingmate's shares traded significantly below the share price at the time Fonterra acquired its investment," the company said.

    "In addition, Beingmate reported losses for the full year ended December 2016 and the half year ended 30 June 2017."

    Still, "the market fundamentals remain strong and the changes to the regulatory regime, anticipated to be effective from 1 January 2018, are expected to have a positive impact on Beingmate's financial performance," it said.

    Units of the Fonterra Shareholders' Fund were last at $6.10 and have gained 1.7 per cent this year.


    © 2018 NZN, NZCity

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