Revenue is up, farm production is up and key targets are in sight - but the high dollar has shackled Fonterra's payout to farmers.
Fonterra chairman Henry van der Heyden said the half-year result to November, including increased revenue of more than $500 million, would do little more
than buffer the company against the high currency.
"We are still holding to our $4.05/kg milk solids [payout] forecast, given we have seen the currency in the US68c-70c range in the new year," van der Heyden said. "It is very frustrating to see improved performance eroded by an over-valued currency."
Dairy Farmers of New Zealand chairman Frank Brenmuhl said the result was not a surprise.
"Fonterra's being saying for a wee while that it believes it can meet its target of $4.05/kg on this season's payout," Brenmuhl said.
Many farmers were nervous about production and had overdrawn their overdrafts, he said.
"There is pressure out there on farms and Fonterra's aware of it and if they thought they could actually extract more out of this at the moment I believe they would pay more."
Farmers had increased production by 2.1 per cent to 578 million kilograms of milk solids despite a cold, wet winter and spring, Fonterra said.
Fonterra's revenue for the six months ending November 30 was $6.546 billion, up from $6.027 billion the previous year.
Sales volumes were 228,000 tonnes ahead of the previous year and operating cash flow was a positive $627 million, compared with an outflow of $63 million the previous year.
An interim value-add component of 23c/kg milk solids was declared, to be paid in February. This payment, for activities such as branded consumer products, was in line with a forecast for 45c/kg for the season
Chief executive Andrew Ferrier said last season's drive to cut costs continued. "We remain relentless on operating efficiencies," he said adding that "stronger second-half prices will help offset the strong currency".
