Fonterra revenue hits $13.9B

File photo.

As a result of higher milk prices, Fonterra's revenue of $13.9 billion for the first nine months of 2016/17 is up eight per cent on the same period last year.

Making the announcement on Wednesday, chief executive officer Theo Spierings says the co-operative's volume to value strategy continues to drive their performance in the Ingredients and Consumer and Foodservice businesses.

'Margins in most of our businesses are similar to last year, and we have moved an additional 350 million liquid milk equivalent into higher value products in the year to date. Consumer and Foodservice volumes in Greater China in particular have grown by 40 per cent in the period.

'We are on track to exceed our target of moving an additional 400 million LME into higher value products by year-end.”

Better than expected autumn weather conditions resulted in more milk at the end of the season, which combined with higher milk prices, 'is good news for the co-operative”.

While previously signalled challenges, including product stream returns and pressure on margins, have had a greater impact than expected in the third quarter, he says.

'The closing of the relative price gap between reference Milk Price products and non-reference products has reduced overall profitability in our Ingredients business. We have continued to manage our costs tightly, with operating expenses for the nine months down 4 per cent.

'Efficiencies and improvements in working capital are ongoing, and capital expenditure is in line with expectations and expected to reduce in the 2017/18 year. Our gearing is forecast to be in the target range of 40-45 per cent at the conclusion of the year.

'All these factors contribute to the continuing strength of the co-operative's balance sheet.”

Fonterra chairman John Wilson says the co-op is well placed to deliver through the rest of the year for its farmers.

While there is work to be done in the final quarter, the outlook for earnings remains achievable, adds John.

'We are committed to delivering the best outcome for our farmer shareholders and unitholders.”

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5 comments

greed

Posted on 28-05-2017 09:49 | By dumbkof2

if they are making these obsene profits why is the price of dairy products here so high. oh i forgot its a rip off


this is terrible

Posted on 28-05-2017 14:37 | By old trucker

remember not long ago FARMERS were at their wits end with low prices and this is a kick in the pants to above, the CHIEF EXECUTIVE is already on MEGA BUCKS and (probably ) get a handsome BONUS.nearly $14 billion profit, that will buy some new tankers,etc.my thoughts only,Sunlive, No1,Thankyou,10-4.


govt

Posted on 28-05-2017 15:42 | By Capt_Kaveman

needs to step in and stop the rort


Disscusting

Posted on 28-05-2017 15:48 | By roseh

How come we have to pay so much for your dairy products.Certainly being ripped off


baseless comments

Posted on 29-05-2017 08:55 | By Petrolhead

Like the above are a concern, there is a disturbing lack of financial understanding here. 5min and a google search will show you Fonterra's 2016 results. They own (Equity) ~$7b of assets, the owe (Debt) ~$5b to banks/others, the amount of money that flowed through the company (Revenue) is ~$13b and the profit after tax is $834m. Their return on capital is 12%, ie for every dollar they have invested they have made 12c for the year, hardly a rort or a rip off. Most companies target 15% returns. Please also remember Fonterra invest $1/2-1b/yr in capital (CAPEX) which is spent largely with NZ support companies, not to mention the wages/salaries/maintenance (OPEX) also pouring into NZ households and economy, that only leaves the profit, oh wait that too is returned to NZ farmer shareholders. Honestly, if you want to look for a boogie man, look at the banks


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