Profits at the New Zealand-based co-op Fonterra fell 9% to NZ$607m in the first half year of trading which ended 31 January 2017.

This is despite sales increasing 5% on the back of improved global dairy prices and growth in its consumer and foodservice business. Milk supplies were down 7% for the first six months to 11.7bn litres. Revenues were up 5% to NZ$9.2bn. Gross margins fell from 21% to 19% in the period.

An additional 227m litres were directed towards its consumer and foodservice business which drove a 30% rise in profits in this business, with an additional 17% going to China. Closing stocks by volume were down 9% compared with the same period last year. Sales of infant formula to China, through its partnership with Beingmate were up 20% in the first half.

Ingredient profits fell 17% due to lower sales volumes and the impact of WMP prices rising relatively faster than their market returns.