Fonterra Co-operative Group’s fiscal third-quarter net profit plunged 27 per cent from last year to NZ$973 million (A$897 million).
However, last year’s comparative performance included results from the Chilean business Soprole and a net gain from its sale to Gloria Foods.
Earnings before interest and taxes fell 6 per cent to $1.44 billion, reflecting improvements in the foodservice and consumer channels and a decline in the ingredients channel.
“Across Fonterra, operating expenses are up due to inflation, upfront costs of driving efficiency improvements and increased IT spend. Historically some of this IT spend would have been treated as capex and capitalised on the balance sheet,” said Miles Hurrell, Fonterra CEO.
“We are heading into year end with a strong balance sheet, with Fonterra’s underlying performance and lower debt position helping to further reduce our financing costs.”
Meanwhile, Fonterra’s opening farmgate milk season forecast for 2024/25 season ranges from $7.25 to $8.75 per kg of milk solids (kgMS) with a midpoint of $8 per kgMS.
“Looking to the 2024/25 season, milk supply and demand dynamics remain finely balanced and China import volumes have not yet recovered to historic levels,” said Hurrell.
“Given the early point in the season, the uncertainty in the outlook and ongoing risk of volatility in global markets, we are starting the season with a cautious approach.”
Earlier, the cooperative announced its plan to divest some or all its global consumer business and integrated businesses, namely Fonterra Oceania and Fonterra Sri Lanka.
