Fonterra’s first half profit jumps 50 per cent

Fonterra has enjoyed a bumper first half result. But its Australian boss says the second half is set to be far tougher

Fonterra is enjoying a bumper first half of this financial year with profit jumping 50 per cent but its Australian boss has warned of a tougher second half.

The trans-Tasman processor posted a profit after tax of $NZ546 million ($A508 million), up $NZ182 million ($A170 million) compared to the same time last year.

Fonterra Australia managing director Rene Dedoncker said the strong results for the first half of the financial year gave the processor room to consolidate with the current six month period set to be more testing.

“It’s a really nice set of results in the first half. But the second half will have a bit of an edge to it, with inflationary pressures continuing to grow,” Mr Dedoncker told The Weekly Times.

“There’s (financial) headwinds around the world. From an Australian perspective, we’ve delivered an EBIT result that’s 25 per cent up on last year — that’s $A65 million.

“That’s a strong result given inflationary pressures and also providing the highest farmgate milk price in living memory.”

Fonterra Australia managing director Rene Dedoncker. Picture: Adam Taylor

On the other side of the Tasman, Fonterra chief executive Miles Hurrell said the results were particularly pleasing given NZ’s stormy summer.

“Our co-op’s scale and diversification across channels and markets has enabled us to navigate through disruption and make the most of favourable market conditions in a number of areas,” Mr Hurrell said.

“While milk powder prices have softened recently, impacting our forecast farmgate milk price range, protein prices have been high, and this is reflected in the lift in earnings we’re reporting today.”

The performance of Fonterra’s Asia consumer brands was hit by weakening currency exchange rates and higher interest rates in some south-east Asian markets.

As a result, Fonterra revised down the valuation of its Asia consumer brands Anlene, Chesdale and Anmum by $NZ70 million ($A65 million).

Mr Hurrell said the consumer and food service had lifted in the first half of the 2022-23 financial year.

“Our improved earnings and strong balance sheet have enabled us to pay an interim dividend of 10 cents per share which is positive news for our farmer owners and unit holders,” he said.

“We also expect to be able to pay a strong full year dividend, in addition to our proposed capital return.”