Fonterra, the New Zealand dairy group, put in a “strong operating performance” in the last year, its CEO said today (26 September) after announcing a cut in the payout to its farmer-owners.

Theo Spierings pointed to a 2% increase in normalised annual earnings, which excluded items such as restructuring costs, and said the company had managed to “add value” despite lower commodity prices. Fonterra’s GlobalDairyTrade index, which measures prices of dairy commodities, hit a 34-month low in May.

An over-supply of milk pushed down milk prices and led Fonterra to cut its payout to farmers by 19% for the 2011/12 financial year to the end of July.

However, Spierings said: “We know volatility is here to stay and we showed our ability to manage this volatility by adding value to our products, generating prices above GDT.”

Normalised earnings were NZ$1.03bn, higher than last year despite flat revenues of NZ$19.8bn. Net profit after tax fell 19% to NZ$624m but Fonterra said last year’s number was boosted by tax credits of NZ$202m.

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