Fonterra has booked an 18% increase in half-year profits, driven by higher dairy volumes and improved margins from its ingredients businesses.

The New Zealand dairy co-operative said today (29 March) that its post-tax net profit increased to NZ$346m (US$283.13m), driving a three cent increase in earnings, which rose to 24 cents per share in the six months to 31 January.

Revenue grew 7% in the period, climbing to NZ$10bn as Fonterra benefited from higher average sales prices and sales volume.

Fonterra's sales volume grew 51%, following increased global demand for dairy ingredients and branded consumer products, the company said. 

The group's ingredients segment reported a 10% increase in revenues, to NZ$8bn, while earnings soared 44% to NZ$273m. 

However, the performance of the consumer business was "mixed", Fonterra said. 
In Australia and New Zealand, revenue was down 4% to NZ$2bn, reflecting a challenging retail environment and an ongoing "pricing battle" between the region's retailers that has "resulted in pressure on major suppliers' margins". While the group's operations in Africa, Middle East and Latin America were hit by currency translation and the strength of the New Zealand dollar.  

Looking ahead, Fonterra CEO Theo Spierings revealed the company is launching a corporate strategy "refresh" that "sets the course for Fonterra's next decade".

"The strategy refresh builds on our considerable strengths: access to efficiently produced, high quality milk; an integrated business model; strong global reach; established customer relationships; and strong consumer brand positions in selected markets," he said. 

"We have sharpened our focus and made choices around the geographies and product portfolios that will deliver the best growth opportunities, particularly those in the emerging markets of China, Asia and Latin America where we can leverage our strengths from milk sourcing through to branded sales."