Fonterra announced a strong set of results for the financial year ending 31 July 2022, reflecting a 2021/22 Farmgate Milk Price of NZ$9.30 per kgMS and normalised profit after tax of NZ$591 million. With a total dividend of 20 cents per share to fully shared-up farmers – comprising of an interim dividend of 5 cents per share and a final dividend of 15 cents per share – the final cash pay-out for farmers is $9.50.
Total Group Revenue increased by 11% or $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 gross profit. However, total gross margin was down due to the higher cost of milk on our Foodservice and Consumer channels during the year. Total Group operating expenses were up in FY22, by 7% to NZ$2.4 billion, with underlying operating expenses increasing due in part to inflationary pressures and supply costs.
Africa, Middle East, Europe, North Asia, Americas (AMENA) normalised EBIT was NZ$527 million, up 57%, due to the improved gross margin in its Ingredients channel. Asia Pacific (APAC) normalised EBIT was NZ$237 million, down 22%, with the improved performance in APAC’s Ingredients channel more than offset by the somewhat weaker Consumer and Foodservice channels. Greater China normalised EBIT was NZ$432 million, up 7%, with an improved performance in its Ingredients channel partially offset by lower margins in the Foodservice and Consumer channels, as a result of the higher cost of milk.
FY23 Outlook
Fonterra has announced a forecast 2022/23 Farmgate Milk Price range of NZ$8.50–$10.00 per kgMS, with a midpoint of NZ$9.25 per kgMS. The Co-op also forecasts 2023 normalised earnings guidance of 45-60 cents per share. The longer-term outlook for dairy remains positive, Fonterra said. And in the medium-term, the co-op expects 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 Farmgate Milk Price for the 2022/23 season.
