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5 Cash will flow to greener dairy Vol 22 No 11, March 25, 2024
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Dairy boosts rural outlook MARKETS
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Fonterra
IGH margins and sales volumes in Foodservice and Consumer products have delivered record numbers for Fonterra in its first-half results for the 2024 financial year. Earnings from continuing operations were up 14% to just under $1 billion and reported net profit after tax rose 23% to $647 million, Earnings per share of 40c have taken a big bite out of the full-year guidance of 50c-65c and enabled an interim dividend of 15c, up from 10c a share in the previous financial year.
China’s domestic milk production is re-balancing and their inventory levels are normalising. Miles Hurrell Fonterra Net debt has been dragged down by $1.6bn to $4.2bn. Revenue was down $2bn to $11.2bn, due to lower prices for ingredients, and operating expenses were down $1bn. Large earnings losses and writedowns in the Consumer division in FY23 were comprehensively improved this year by $300m to post $177m and the Foodservice division improved by $200m to $342m. They combined to outweigh the
earnings reversal in Ingredients, down $383m to $467m. Last year Ingredients contributed all the interim earnings and this year that share fell to 46%. Higher margins in Foodservice and Consumer came about because of lower milk input costs compared with the two prior seasons and momentum from higher market prices achieved after worldwide covid restrictions were relaxed. “Gross margins are expected to continue to tighten in the second half of FY24 reflecting the recent increase in the price of reference products on GDT that inform the cost of milk,” Fonterra said. Chief executive Miles Hurrell said his team delivered a strong first half in a trading environment with a backdrop of market volatility and geopolitical uncertainty. The strong balance sheet had allowed the co-operative to pay the extra dividend. He said the drop in earnings in Ingredients was more than offset by the lift in Consumer and Foodservice. Hurrell called global supply and demand “finely balanced”, while the fundamentals remain positive overall. “There are signs of demand stabilising. China’s domestic milk production is re-balancing and their inventory levels are normalising,” he said. The softer demand from China over the past year saw an in-flow of volumes from Latin America, Africa and the Middle East. Demand from the rest of Asia is Continued page 3
Good on ya mate, and mates of mates #MOM4M is heading to the Woolshed at the Gisborne A&P Society Showgrounds on April 19. Organised by Hawke’s Bay farmer Matt Holden, Mates of Mates 4 Mates (#MOM4M) was first staged last year in Hastings as a fundraiser for the Rural Support Trust. Now Holden has focused on Tairawhiti after the region’s recent weather events.
Getting through the tough times Murray Elwood has navigated the ups and downs of the beekeeping industry for over 30 years. He explains how he manages the pressures of an uncertain business.
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NEWS 4
NEWS 7
OPINION 11
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Hugh Stringleman