The New Zealand dairy firm Fonterra Co-operative Group has announced a final payout of NZ$4.10 (US$4.10) per kilogram of milk solids, representing a 25 cent increase on its season-start forecast and three cents higher than its last forecast.
The company said the result was driven by higher operating returns from Fonterra’s value added activities, cost efficiencies, record sales volumes and higher than forecast commodity prices.
In addition to the $4.10 payout, Fonterra’s shareholders at the end of the season have, on average, received a benefit equal to 14 cents per kg/MS. This NZ$0.14 benefit arose as a result of changes to Fonterra’s capital structure and the amount of benefit varied amongst shareholders, the company said.
The payout equates to a total payment for milk of NZ$5bn and was achieved in spite of the co-operative’s highest ever average exchange rate of NZ$0.66 to the US dollar.
Fonterra’s revenues reached NZ$13bn, NZ$678m up on the previous season on the back of higher ingredients sales volumes for the season of 2.5m MT, an increase of over 9% from the 2004/05 season.
Fonterra chairman Henry van der Heyden said a strong final quarter had allowed the company to make a payout in excess of its previous forecast. “We really demonstrated the strength and flexibility of our supply chain and how we can now respond a lot quicker to changes in supply and market conditions,” van der Heyden said. “We shifted nearly 100,000 MT more in the last quarter than we did in the same period last season. That includes the first ever sale of over 300,000 MT in a calendar month, achieved in May.”
Sales at Fonterra’s Global Trade and Ingredients businesses were NZ$663m higher at NZ$9.2bn, reflecting the higher volumes. The total contribution from the ingredients’ operating surplus, effectively the EBIT, was NZ$725m, up 21% from last year.
Fonterra Brands’ operating revenue, excluding inter-segment sales, gains on the sale of investments and other one-off items, was NZ$192m ahead of last year NZ$3.7bn, driven by increased sales, improved selling prices and benefits of brand acquisitions. Fonterra Brands’ operating surplus was NZ$288m, up 9% from last year, reflecting the increased revenue and higher returns from premium brands.