23 Mar 2011

Fonterra 'on track for one of best years'

4:58 pm on 23 March 2011

Fonterra Dairy Co-operative has reported a half-year net profit of $293 million and says it is on track to achieve one of its best years in terms of returns to its farmer shareholders.

The co-operative says that is due to strong international dairy markets.

Fonterra has confirmed its current forecast payout to farmers of $7.75 to $7.80 a kilo of milk solids in cash and dividends, which would put it above the existing record payout.

The co-operative has recorded half-year revenue of $9.4 billion, which is 21% higher than the corresponding period last season.

That mainly reflects the impact of higher international dairy prices which Fonterra says were partly offset by a slight drop in sales volumes.

It is the first time Fonterra has reported an interim profit following the introduction of the monthly milk price for determining the cost of New Zealand-sourced milk.

Fonterra chief executive Andrew Ferrier believes New Zealand dairy prices are nearing their peak and the co-operative is expecting good returns for the next few years.

However, he says while Fonterra is yet to see global demand for dairy products slow down, milk prices can not rise much higher.