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New Zealand's Fonterra Cooperative Group Ltd. said it
managed a small rise in annual profit, as strong global milk prices offset
weather-related domestic milk production declines and a drop in Chinese demand
due to lockdowns.
The world’s biggest dairy exporter’s normalized net profit,
which excludes one-off charges, came in at NZ$591 million ($345 million) for
the year ended July 31, up 1% from the prior year.
“These results demonstrate that our decisions relating to
product mix, market diversification, quality products, and resilient supply
chain mean the Co-op is able to deliver both a strong milk price and robust
financial performance in a tough global operating environment,” Fonterra CEO
Miles Hurrell said in a statement.
After a 4.2% decline in annual domestic milk production,
Fonterra expects domestic output to be flat at best or lower this year. Despite
this, it is upbeat about earnings prospects due to higher prices and has said
it expects to earn between 45 and 60 New Zealand cents per share this financial
year.
That compares with an earlier estimate of 30 to 45 cents and with a result of 35 cents for the past financial year.
Fonterra’s chief financial officer, Marc River, said the
decline in the domestic output meant the company’s sales teams were undergoing a
big mind shift from having to find new buyers to thinking about who the company
might not sell to.
“The opportunity is how do you get as much value per drop of
milk as you can to bring that back home to those farmers,” he said.
He also said that while ongoing COVID-19-related lockdowns
in China were still hurting demand there, global pricing is currently less
driven by China than it had been in the past.
Fonterra was seeing cost inflation across the board and
expects to see wage inflation come through in the near term, he added. ($1 =
1.7094 New Zealand dollars)
|Source: Online/SZK
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