Industry News

Fonterra announces boost in FY24 earnings

Dairy co-operative, Fonterra, has revealed its Q3 business update.

Compared to last year, the company has announced that earnings from continuing operations year to date equates to 61 cents per share which is up 1.0 cent.

Profit after tax from continuing operations was $1,013 million NZD (approx. 934.6 million AUD), up $20 million NZD (approx. $18.5 million AUD).

According to Fonterra CEO, Miles Hurrell, the result, from Q3, is driven by continued strong earnings across all three of the Co-op’s Foodservice and Consumer Channels, allowing the company to lift its FY24 forecast.

“Fonterra’s sales volumes were up slightly on last year by 38kMT, or 1.0 per cent, due to higher sales volumes in our Foodservice and Consumer channels,” said Hurrell.

“We also saw price relativities ease over the quarter, and we anticipate them to narrow further in Q4 as they return to more historic levels.”

“Our increased earnings range assumes softer earnings in Q4 due to the seasonality of our milk collections, the higher cost of inputs in the Foodservice and Consumer channels, and the impact of the investments in modernising our IT systems.”

Detailing a breakdown of the update Hurrell also commented on the costs faced by the company and the contributing factors, however, he remains optimistic as the company heads into the year in a strong financial position.

“Across Fonterra, operating expenses are up due to inflation, upfront costs of driving efficiency improvements and increased IT spend,” he said.

“Historically, some of this IT spend would have been treated as capex and capitalised on the balance sheet.

“We are heading into year end with a strong balance sheet, with Fonterra’s underlying performance and lower debt position helping to further reduce our financing costs.

“As a result of this performance, we have lifted our forecast FY24 continuing operations’ earnings range to 60-70 cents per share, up from 50-65 cents per share.”

Following the company’s announcement earlier this month, revealing its intention to explore divestment options for its global customer business, Hurrell provided an update.

“It’s still early days in this process, and we commit to providing farmer shareholders, unit holders, our people and the market updated on new developments as they occur.

“We are also progressing work on our updated strategy and expect to share further detail over the coming months.”

Note about ‘continuing earnings’: It excludes earnings from discontinued operations – in FY24 discontinued operations were DPA Brazil and in FY23 discontinued operations were DPA Brazil, Soprole and China Farms.

In other news, Qube recently announced a $332.5 million terminal acquisition.

The post Fonterra announces boost in FY24 earnings appeared first on Trailer Magazine.

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