Fonterra Co-operative, New Zealand’s largest dairy company, reported a 50% jump in profits for the first half of the year and boosted guidance for full year earnings to 55-75c/share.
The company also proposed an additional dividend to shareholders of 50c/share, subject to the completion of the sale of its South American business announced earlier this year.
Fonterra said it moved more product into skim milk powder and cream output as prices for whole milk fell. It also moved a higher proportion of current season milk into cheese and protein lines to take advantage of higher margins.
The success in this move was seen in the 118% increase in profits in the company’s ingredients channel.
There was less good news in Fonterra’s Asia business with a $70m writedown in the value of its consumer brands in the region. There were also delivery problems in January and February following adverse weather events on New Zealand’s north island.
Fonterra CEO Miles Hurrell said the results show the co-op is performing well, and the outlook remains positive.