The chairman of Fonterra has said the New Zealand dairy giant came through the recession “well”, despite continued “volatile” business conditions, after the company posted a 12% rise in annual profits.

The group annouced today (23 September) that it posted NZ669m profit for the year ended 31 July, up 12% on the prior year. The profit includes $174m of non-recurring gains, primarily arising from sales of non-strategic assets.

Fonterra said its balance sheet is “in its strongest shape in the Co-operative’s history, with gearing ratio reduced to 44.9%, down from 53% a year earlier”, which it said it reflected an increase of $862m in equity, primarily as a result of farmer-shareholders investing $459m in additional shares.

“Fonterra has come through the recession well. Although business conditions remained volatile, customer demand returned and international dairy prices rose sharply,” said Fonterra chairman Sir Henry van der Heyden.

The firm also announced its second-highest payout of $6.70, comprising a milk price of $6.10 per kilogram of milksolids (kgMS) and an annual dividend of 27 cents per share, with retentions of 33 cents per share.

The company said that the average farmer who has a 100% share-backed supply for 2009/2010 will receive a cash payout of $6.37 for every kgMS supplied during the season, compared with last year’s $5.20.

“Fonterra’s consumer businesses had strong earnings performances despite the significant adverse impact of exchange rate movements,” said CEO Andrew Ferrier. “On a normalised basis, the combined earnings of the consumer businesses were up 19% – their fifth consecutive year of growth.”