The result includes a lower Farmgate Milk Price of $6.08 per kilogram of milksolids (kgMS), down from $7.60 last year reflecting lower commodity prices and a strong New Zealand dollar. A dividend of 32 cents per share has been announced, with retentions of 10 cents per share.
Announcing the result, Chairman Sir Henry van der Heyden said the 2012 year had been one out of the box for dairy: “All around the world, we saw record dairy production which was mirrored back here in New Zealand.
“Global dairy demand held up reasonably well but this ocean of milk obviously impacted on global commodity prices, with the GlobalDairyTrade (GDT) index reaching its lowest value in 34 months in May.
“This contributed to a lower Farmgate Milk Price in the 2012 year, however, the impact of this decline on overall earnings for farmers has been eased a little by the much higher volumes of milk they produced.”
Fonterra Chief Executive Theo Spierings said the Co-operative had posted a strong operating performance, with normalised earnings of NZ$1.03 billion for the 2012 year, up 2 per cent on the prior year.
Profit before tax was up 9 per cent on the prior year and net profit after tax was $624 million, down 19 per cent, largely due to tax credits of $202 million in the prior year not repeated in the current year. Excluding those credits, Fonterra’s net profit after tax improved by 10 per cent.
Results highlights compared to the prior year include:
Record New Zealand milk flows, up 11 per cent to 1,493m kgMS in the current season
11 per cent increase in export volumes to 2.32 million metric tonnes (MT)
Sales volumes increased 2 per cent to 3.94 million MT
Flat revenues of $19.8 billion
Higher operating cash flows of $1.4 billion, up $206 million
Balance sheet strengthened with economic gearing ratio improving from 41.8 per cent to 39.1 per cent
There are no surprises there.
The outlook for the current season is volatile which reinforces the benefits of a co-operative which looks after the interests of suppliers.