Fonterra's profit is up 183 per cent on the previous year.
Fonterra's profit is up 183 per cent on the previous year.
Fonterra has announced improved profits of more than half a billion dollars, just days after it increased the number of jobs it was cutting to 750.
But revenue for the year was $18.8 billion, down 15 per cent on the previous year.
The dairy giant said its net profit after tax came to $506 million in the year to July 31, up 183 per cent from the previous year's profit, and raised its forecast payout for the current season.
Fonterra's "normalised" earnings before interest and tax came to $974 million, up 94 per cent. It said it would pay a final dividend of 25c share - in the middle of its forecast range.
Fonterra stuck with its 2014/5 farmgate milk price of $4.40 a kg of milksolids which, together with the dividend, takes the final cash payout to $4.65 compared with $8.50 a kg in the previous year.
The co-op said the forecast total payout for the current season was $5.00 to $5.10 per kg.
In addition, Fonterra also revised up its current milk price forecast for 2015/6 to $4.60 a kg from a previous forecast of $3.85 a kg.
The forecast total available payout for the 2015/6 was forecast at $5.00 to $5.10 per kg, comprising the farmgate milk price and a forecast earnings per share in a 40 to 50c range.
Key points from today's profit announcement:
- Fonterra rebounds from a very poor 2013/4 year with a net profit of $506 million in the year to July 31, up 183 per cent, and upgrades its farmgate milk price forecast for 2015/6.
- Revises 2015/16 milk production to a 5 per per cent fall from 2 to 3 per cent previously.
- Pays a final dividend of 25c share - in the middle of its forecast range.
- Sticks with its 2014/5 farmgate milk price of $4.40 a kg of milksolids which, together with the dividend, takes the final cash payout to $4.65 compared with last year's record payout of $8.50 a kg.
- Forecasts a total payout for the current season of $5.00 to $5.10 per kg.
- Revises up its current milk price forecast for 2015/6 to $4.60 a kg from a previous forecast of $3.85.
- Forecasts current year's earnings in 40c to 50 a share range.
- Units in the Fonterra Shareholders Fund last traded at $5.24, up 42c or 8.7 per cent since the end of August.
Chairman John Wilson said the lift in profitability in the second half of the 2015 financial year was expected to carry through into the current financial year.
"The strengthening of performance in the second half resulted in normalised earnings before interest and tax almost doubling, with good growth in our consumer and foodservice businesses and the results of a major push in our ingredients business to offset low milk prices with improved margins," Wilson said.
Chief executive Theo Spierings said the improved second half results in the 2015 financial year were driven by a strong focus on cash and costs.
"We focused on improving our sales mix, achieving more efficiencies, maximising our gross margins and achieving our strategic goals faster," he said.
With capacity now more in line with current expectations of milk growth, the co-operative would have a reduced capex spend in 2016 of $900 million, he said.
Fonterra announced this week that as a result of its business review it was making another 227 jobs redundant, resulting in savings of $103 million a year.
It said one-off savings resulting from the review, such as improving working capital, have enabled the co-operative to support its farmers during challenging market conditions.
We have great people, but we have to make tough decisions to ensure Fonterra remains competitive in this environment.
Spierings said the purpose of the review was to ensure that Fonterra remained well positioned to compete in the global dairy market.
"We have great people, but we have to make tough decisions to ensure Fonterra remains competitive in this environment," he said in a statement.
More Fonterra job cuts have raised questions about whether the dairy giant will need all the space it has leased in new upmarket Auckland headquarters.
Fonterra is also due to move more than 1000 staff into its new HQ on Auckland's Fanshawe St.
The business is to shift staff from its Princes St headquarters off Shortland St, down towards the waterfront to a new purpose-built premises on the corner of Fanshawe St and Halsey St.
The new building is nearing completion and well before the job cuts, Fonterra took on a 15-year lease with two eight-year rights of renewal.
More million dollar workers
The number of Fonterra employees who were paid a salary of more than $1 million in the year to July 31 rose to 22 from 17 in the previous year.
The number of employees paid over $1 million had been falling over the last few years from 26 in the July 2012 year, to 21 in 2013.
According to employee remuneration figures in the company's annual result, those paid a salary of $100,000 to $110,000 totalled 1,072 in the year compared with 957 in the previous year.
