The company has been paying a record price to its suppliers and at the release of the business’ annual results, forecast that the farm gate price was expected to remain in the NZ$8.50 to NZ$10/kg of milk solids range for 2023.
The company announced it was not going to sell off its Australian division, and also announced a $583 million after tax profit on a turnover of $23 billion, which was up 11 per cent.
Speaking at the release of the company’s annual financial results, Fonterra chief executive officer Miles Hurrell said the Australian business was going well and it would play a key role in helping them get to their 2030 strategic targets.
Some time ago Fonterra announced it was undertaking a strategic review of the Australian division, including ownership options.
Meanwhile, the company is moving ahead with plans to sell off its Chilean dairy manufacturing business, Soprole.
“As part of the strategic review of the ownership of our milk pools outside New Zealand, we continue to make progress, with the sales process for the Soprole business progressing,” Mr Hurrell said.
“Meanwhile, we’ve looked at a number of options for our Australian business and have decided that it’s in the co-op’s best interests to maintain full ownership.
“Australia plays an important role in our consumer strategy with a number of common and complementary brands and products and as a destination for our New Zealand milk solids.”
Mr Hurrell said despite tight supply, there was robust demand from global customers for dairy, which has helped Fonterra deliver a strong milk price and financial performance.
“Total group revenue increased $2.3 billion to $23.4 billion due to higher product prices, but sales volumes decreased in FY22 due to short-term shifts in demand and ongoing shipping and supply disruptions.
“Strong margins in the ingredients channel, particularly in the final quarter, resulted in an increase in our gross profit.
“However, total gross margin was down due to the higher cost of milk on our food service and consumer channels during the year.”
Mr Hurrell said the longer-term outlook for dairy remained positive.
“And in the medium-term, we expect to see an easing in some of the geopolitical events, namely the COVID-19 lockdowns in China and the economic challenges in Sri Lanka.
“This has been reflected in our earnings guidance and forecast farm gate milk price for the 2022-23 season.”
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