“Significantly higher”: Milk giant’s $364m payday

Milk supply is tightening worldwide, yet one of the biggest players in the dairy industry is still producing strong on-farm returns.

Input costs for Fonterra have risen “significantly higher,” according to its NZ boss, as the processor posted a mid-year rise in revenue today.

The Auckland-based processor noted the average cost of milk, its main input cost, soared nearly 30 per cent on the same time last year.

Fonterra chief executive Miles Hurrell said the results highlighted strong demand for dairy produce across multiple markets at a time of constrained supply.

Overall profit dropped to NZ$364 million in the six months to the end of January, from NZ$391 million in the same time frame last year.

Meanwhile, revenue rose 9 per cent to NZ$10.8 billion.

“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 per cent on the same time last year,” Mr Hurrell said.

“This shows we’re performing well even with a high farmgate milk price.

“The board’s decision to pay an interim dividend will be welcome news for our unit holders and farmer owners.”

Across the Tasman, Fonterra Australia managing director René Dedoncker said his side of business has hit its targets despite lower Australian milk production as well as end-to-end supply chain issues.

“Here in Australia, we’re doing what we said we would: we posted a mid-year profit, an EBIT, of NZ$59 million,” Mr Dedoncker said.

“It is a lift on last year and it meets all of the targets we set ourselves.

“Sitting alongside that is a competitive farmgate milk price,

“Total milk supply is down across Australia — every processor is dealing with milk reductions of two to three per cent and we’re no different.”