Fonterra to keep Australian business

Fonterra has confirmed that it will keep its Australian business after reporting a normalised profit after tax of NZ$591 million for financial year 2021–22, up 1% from the previous year.

Chief Executive Miles Hurrell said: “We’ve looked at a number of options for our Australian business and have decided that it’s in the co-op’s best interests to maintain full ownership.

“Australia plays an important role in our consumer strategy, with a number of common and complementary brands and products and as a destination for our New Zealand milk solids. The business is going well, and it will play a key role in helping us get to our 2030 strategic targets.”

Fonterra’s total group earnings before interest and taxes (EBIT) were reported as NZ$991 million, up NZ$39 million or 4% from the previous year. Hurrell said that despite tight supply, there was robust demand from global customers for dairy, which helped Fonterra deliver a strong milk price and financial performance. Reviewing the ownership structure of the Australian business was part of the company’s 2030 strategy to focus on New Zealand milk.

“Even though we have decided not to sell a stake in our Australian business, we are still committed to targeting a significant capital return to our shareholders and unit holders. The amount of any capital return will ultimately be determined on a number of factors, including the successful completion of the divestment program as well as our ongoing debt and earnings levels,” Hurrell said.

The company continues to focus on sustainability, with Hurrell advising, “We have continued to reduce our greenhouse gas emissions and transition away from the use of coal. We continue to progress the decarbonisation of our light and heavy vehicle fleets, and we have progressed the on-farm trial of Asparagopsis seaweed as supplemental feed for dairy cows.

“We have continued to lead the way in dairy science and innovation, both in the products we’re innovating and the way in which we innovate. Two examples of this innovation are the MinION genome sequencing device, which provides dairy DNA results at pace and at a quarter of the previous cost, and the launch of an exciting new whey protein concentrate (WPC) which can be used to create different textures in high-protein yoghurt.”

NZ$13.7 billion was returned to the NZ economy through the Farmgate Milk Price payout to farmers.

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