Australia

Dairy giant pledges to Australian assets

Global dairy giant Fonterra keeps its entire Australian business on the back of promising profits and quells partial divestment concerns.

The New Zealand cooperative is the world’s largest dairy exporter and owns popular household brands Perfect Italiano, Mainland and Western Star.

The company faced volatile supply chains, rising costs, creeping inflation and the aftermath of protests in Sri Lanka during last fiscal year.

Despite challenges, Fonterra CEO Miles Harrell said the 12 months were going well.

At an investor briefing on Thursday, Hurrell said retaining full ownership of Fonterra’s Australian assets is the best path to achieving continued growth and return on investment.

“We have considered many options for doing business in Australia and have determined that it is in the cooperative’s best interest to retain full ownership,” he said.

“Australia plays a key role in our consumer strategy with many common and complementary brands.

“Our business is on track and will play an important role in achieving our 2030 strategic objectives.”

Fonterra, owned by about 10,000 New Zealand farmers, began overhauling its Australian operations a year ago.

The cooperative has also considered selling the business publicly or selling some stake in the Australian business.

The company has since announced the sale of its Chilean division Soprole after an ill-fated expansion effort, refocusing on exports from New Zealand.

On Thursday, Fonterra reported an 11% increase in total revenue to NZ$23.4 billion (A$20.6 billion).

Normalized profit after tax increased 1% to a total of NZ$591m. However, Fonterra’s reported net profit fell by 3% to his NZ$583 million. Both figures were hampered by inflation.

The company paid a record farm-off milk price of NZ$9.30 per kilogram in the 2021/22 financial year.

Hurrell said strong demand in the US and Europe and higher dairy prices boosted Fonterra’s profits.

The company originally announced its intention to return $1 billion to shareholders by 2024, but has pushed that deadline to 2030 so it can preserve its Australian assets.

“Although we have decided not to sell our stake in the Australian business, we remain committed to targeting significant capital returns to our shareholders,” Mr Harrell said.

Fonterra maintains its positive outlook for the next fiscal year, thanks to easing geopolitical events such as China’s COVID-19 lockdown and political tensions in Sri Lanka, as well as long-term optimism for dairy. I’m here.

We forecast farm-to-farm milk prices in the range of $NZ8.50 to $10.00 in 2022/23.

“A strong balance sheet means we are well positioned to weather uncertainty and market volatility,” Harrell said.

Dairy giant pledges to Australian assets

Source link Dairy giant pledges to Australian assets

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