Fonterra reports record turnover due to exports
An estimated NZ$19.9bn (EUR11.6bn) in revenue has set a new record for New Zealand dairy giant Fonterra. The co-operative credits “a bumper year for dairy exports and strong contributions from overseas businesses” for its record results. Dairy exports for the year amounted to 2.1 million tonnes, and it collected 1.3bn kg of raw milk in the 2011 season.
The results reflect an improved performance by Fonterra’s ingredients businesses that export to more than 100 markets as well as by overseas consumer businesses, especially across Asia and the Middle East. However, consumer business profits in New Zealand and Australia were down in a tough market environment.
Fonterra CEO Andrew Ferrier says Fonterra achieved a 13% increase in net profit after tax, to $771 million, even after paying farmer shareholders 29% more for the milk they supplied: “Although the business was impacted by higher dairy ingredient prices and a fragile global economy, our underlying profitability showed solid growth over last year due to improvements within our ingredients businesses and the strength of our consumer brands.”
Revenue from the consumer businesses hit a new record of $6.1 billion. However, the consumer businesses faced a challenging year as margins came under pressure from the rise in commodity prices.
Ferrier says the standout consumer business segment was Asia/Africa, Middle East, with normalised earnings rising 12%. “We continue to focus on high quality nutritional and foodservice solutions that leverage our trio of power brands, Anchor, Anlene and Anmum.”
In the Australia/New Zealand business segment, however, normalised earnings fell 17%. Ferrier says margins were compressed as a fiercely competitive market environment made it harder to reflect fully higher commodity prices in consumer pricing. “Although it was undoubtedly a tough year in New Zealand and Australia, our market leadership positions across most categories mean we are in a sound position to work through current market challenges.”
Chairman Henry van der Hayden notes that Fonterra’s new CEO Theo Spierings is take office on 26 September 2011, succeeding Ferrier who announced in March he was stepping down after eight years as CEO.
