Thursday, 21 May 2020 09:50

Fonterra weathers COVID-19 storm

Written by  Staff Reporters
Fonterra has weathered the effects of COVID-19. Fonterra has weathered the effects of COVID-19.

Fonterra has weathered the effects of COVID-19 to deliver an impressive third-quarter results.

For nine months ending April 30 this year, the co-op’s total group normalised Earnings Before Interest and Tax (EBIT) topped $815 million, an increase of $301 million on this time last year.

Fonterra chief executive Miles Hurrell attributes the result to work done over the last year to strengthen its balance sheet, and the co-op’s ability to respond quickly has helped manage the COVID-19 situation over the last few months. “We’re drawing on our global supply chain and diverse product and customer base to minimise disruptions for our customers and our business. 

“COVID-19 has affected virtually every country, market and industry, and as a result, the global dairy market is volatile and the outlook is uncertain. 

“This is a tough environment for everyone. As a New Zealand dairy co-op, exporting 95% of our products, many of the markets we do business in have always been prone to sudden shocks and this can impact where, when and what we sell. However, the global nature of COVID-19 is like nothing we’ve experienced before. 

“Like other businesses, we will feel the impact of COVID-19 and its flow-on effects but how and to what extent is still uncertain. We are drawing on all our experience in managing market volatility.”

Hurrell says he’s proud to lead a team “who genuinely care and recognise the importance of our farmer owners, unit holders, customers and local communities”. 

“The way our co-op has responded to COVID-19 has been a real highlight for me.”  

All three of Fonterra’s business units have delivered a good performance for the year to date, despite the negative impact COVID-19 had on the foodservice business in the third quarter.

Key results

  • Total Group Earnings Before Interest and Tax (EBIT): $1.1 billion, up from $378 million 
  • Total Group normalised EBIT: $815 million, up from $514 million 
  • Total Group normalised gross margin: $2.5 billion, up from $2.2 billion 
  • Normalised Total Group operating expenses: $1,665 million, down $148 million from $1,813 million 
  • Free cash flow: $698 million, up $1.4 billion
  • Net debt: $5.7 billion, down from $7.4 billion 

More like this

"Our" business?

OPINION: One particular bone the Hound has been gnawing on for years now is how the chattering classes want it both ways when it comes to the success of NZ's dairy industry.

Farmers' call

OPINION: Fonterra's $4.22 billion consumer business sale to Lactalis is ruffling a few feathers outside the dairy industry.

Wasted energy

OPINION: Finance Minister Nicola Willis could have saved her staff and MBIE time and effort over ‘buttergate’ recently by not playing politics with butter prices in the first place.

Featured

Trial shows benefits of spring nitrogen use

A landmark New Zealand trial has confirmed what many farmers have long suspected - that strategic spring nitrogen use not only boosts pasture growth but delivers measurable gains in lamb growth and ewe condition.

Eric Roy: Championing the pork industry

It was recently announced that former MP and Southland farmer Eric Roy has stepped down of New Zealand Pork after seven years. Leo Argent talks with Eric about his time at the organisation and what the future may hold.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Buttery prize

OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having…

Gene Bill rumours

OPINION: The Gene Technology Bill has divided the farming community with strong arguments on both the pros and cons of…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter