Fonterra Achieve $346 Million Half Year Profit

Fonterra achieved total sales volume growth of 51 percent from the previous period last year, revenue was up 7 percent. Announcing the Co-operative's financial results for the half year to 31 January 2012, Fonterra confirmed its current forecast Payout range (before retentions) for the 2011/12 season of $6.75 - $6.85 for a fully shared up farmer.

29 Mar 2012 --- Fonterra Co-operative Limited announced an 18 percent increase in its half year net profit after tax of $346 million, boosted by higher volumes and an improved performance by its Standard & Premium Ingredients business.

Fonterra achieved total sales volume growth of 51 percent from the previous period last year, revenue was up 7 percent

Announcing the Co-operative's financial results for the half year to 31 January 2012, Fonterra confirmed its current forecast Payout range (before retentions) for the 2011/12 season of $6.75 - $6.85 for a fully shared up farmer.

The 2011/12 forecast Payout range (before retentions) is based on a forecast Farmgate Milk Price of $6.35 per kgMS and an unchanged net profit after tax range of $570-$720 million, equating to 40-50 cents per share.

Fonterra Chairman Sir Henry van der Heyden said the Co-operative had performed well particularly given the turmoil in global markets.

"Good spring and early summer growing conditions across most of the country (with the notable exception of the lower South Island) led to strong growth in New Zealand dairy production and record volumes.  Fonterra's milk collections for the season to date were up 10 percent on the same period in 2011. These record milk collections flowed into record production, with a new export volume record achieved in December 2011.

"International dairy prices softened after the highs of last year but remained relatively stable throughout the first half of the year.  These prices were supported by strong demand for quality dairy ingredients in emerging markets across a number of Asian economies, as well as Brazil and China, offsetting economic uncertainty in Europe," said Sir Henry.

CEO Theo Spierings said Fonterra's Standard & Premium Ingredients businesses had a strong first half, with a 10 percent lift in revenue to $8 billion, achieved from higher sales volumes, and a 10 percent increase in average USD sales prices.

"The Standard & Premium Ingredients businesses' normalised EBIT2 was 44 percent higher than the same period last year.

"We are now seeing the benefits of our focus on managing volatility in the business, with more favourable contract agreements, a closer pricing alignment between our sales book and the spot market, and targeting sales of products that deliver greater value," Mr Spierings said.

Performance in the consumer businesses was mixed, with a strong New Zealand dollar impacting the Asia/Africa and the Middle East, and Latin America businesses.  The Australia-New Zealand consumer business felt the impact of pricing pressure which reduced earnings.

Sir Henry said an interim dividend of 12 cents will be paid on 20 April 2012.

"The Board has approved a change to the Co-operative's dividend policy so that a greater proportion of dividends can be paid out at the half year," Sir Henry said.

Previously, Fonterra's dividend policy allowed for the Co-operative to pay out 30 percent of the forecast full year dividend at the half year, with the remainder paid out at the end of the financial year in October.

The change enables a payment of an interim dividend of 40-50 percent of the forecast full year dividend.

Looking ahead, Fonterra CEO Theo Spierings said Fonterra would build enduring value for shareholders through a Group strategy refresh that sets the course for Fonterra's next decade.

"The strategy refresh builds on our considerable strengths: access to efficiently produced, high quality milk; an integrated business model; strong global reach; established customer relationships; and strong consumer brand positions in selected markets.

"We have sharpened our focus and made choices around the geographies and product portfolios that will deliver the best growth opportunities, particularly those in the emerging markets of China, Asia and Latin America where we can leverage our strengths from milk sourcing through to branded sales," said Mr Spierings.