Business
Fonterra’s annual profit falls 25%; shares rise on dividend declaration
Global Banking & Finance Review®
Company
By Rajasik Mukherjee
(Reuters) -New Zealand’s Fonterra posted a 25% drop in its fiscal 2024 profit on Wednesday, hurt by poor earnings from its ingredients segment and volatility in demand from key importing regions, but declared a special dividend, sending its shares higher.
Improvement in earnings from its food service and consumer segments due to higher sales volumes was offset by a decline in earnings from the ingredients business as prices eased compared to last year.
Sales and import volumes into China also slowed largely due to increased local production of fresh milk.
The dairy firm declared a final dividend of 25 NZ cents per share as well as a special dividend of 15 NZ cents apiece.
Shares of the co-operative group climbed as much as 3.7% to its highest level since July 16, 2021, while the broader market traded flat.
Investors may be more interested in the special dividend of 15 (NZ) cents per share,” said Tom McBride, a financial adviser at Hamilton Hindin Greene.
Strength in the Global Dairy Trade auctions and constrained milk supply affecting many of the key producing regions are positive signals to investors,” added Tom.
Fonterra expects earnings for fiscal 2025 between 40 and 60 NZ cents per share.
The Auckland-based company reported earnings from continuing operations for fiscal 2024 of 70 NZ cents per share, hitting the top end of its outlook range provided earlier this year.
The dairy exporter also hiked its 2024/25 forecast farmgate milk price range – the price it pays to farmers for milk – to NZ$8.25-NZ$9.75 per kilogram of milk solids (kgMS), citing higher global dairy prices and constrained supply from key producing regions.
The company reported a final 2023/24 farmgate milk price of NZ$7.83 per kgMS.
The world’s biggest dairy exporter reported a profit after tax of NZ$1.17 billion ($741.66 million) for the year ended July 31, compared with NZ$1.58 billion a year ago.
($1 = 1.5775 New Zealand dollars)
(Reporting by Rajasik Mukherjee and Aaditya Govind Rao in Bengaluru; Editing by Alan Barona)
A dividend is a portion of a company's earnings distributed to shareholders, typically in cash or additional shares. It represents a way for companies to share profits with their investors.
Profit after tax is the net income of a company after all expenses, including taxes, have been deducted from total revenue. It reflects the actual earnings available to shareholders.
Farmgate milk price is the price that dairy processors pay to farmers for their raw milk. It is influenced by market conditions, production costs, and global dairy prices.
Fiscal profit refers to the earnings of a company over a specific financial period, typically reported annually. It indicates the company's financial performance and profitability.
Market capitalisation is the total market value of a company's outstanding shares of stock. It is calculated by multiplying the share price by the total number of shares.
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