Fonterra hikes dividend as higher margins boost profit
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The news: New Zealand dairy company Fonterra hiked its interim dividend by 50% as it reported increased earnings for the six months to 31 January 2024.
The numbers: The world's largest dairy exporter recorded net profit of NZD674 million ($621 million) for the period, up 23% year on year.
Total revenue, though, dropped 15% to NZD11.3 billion, as Fonterra returned NZD800 million to its farmer shareholders and unit holders following the divestment of its Soprole business last year.
The dairy co-operative, owned by 9,000 farmers and their families, lifted its first half dividend 50% from 10 NZ cents per share to 15 NZ cents per share.
Fonterra reaffirmed its forecast operations earnings guidance for the full year of 50 to 65 NZ cents per share.
The context: Auckland-based Fonterra said its first-half performance was driven by a higher gross profit — which rose to 18.4% from 16.6% a year earlier — and sales volumes across its diversified product and category mix. The company also benefited from a rising forecast Farmgate Milk Price, following volatility earlier in the season.
Fonterra said that while global inflationary pressures are easing, the company is monitoring the potential for volatility as a result of geopolitical instability.
It said it is "well prepared" for any disruption in global supply chains or changes in demand from key importing regions, in part due to its partnership with shipping venture Kotahi and its diversification across markets.
The source: ASX announcement
