A cheering result from Fonterra, but there are challenges ahead

Fonterra CEO Miles Hurrell says 2019/20 was a good year for the co-op, with profit up, debt down and a strong milk price.  The  result,  a profit   of  $659m, may have  brought a  cheer   from the  co-op’s  farmer-suppliers and  Hurrell  deserves  a cheer, too, for   succeeding  in  turning around  the  fortunes of the  co-op,  after two  years  of  losses.

“We increased our profit after tax by more than $1bn, reduced our debt by more than $1 billion and this has put us in a position to start paying dividends again,” he says.

“I’m proud of how farmers and employees have come together to deliver these strong results in a challenging environment. They have had to juggle the extra demands and stress of COVID-19 and have gone above and beyond. I would like to thank them for their hard work and support.”

Fonterra  settled  on a  milk price for the  season  just  past  of  of  $7.14kg/MS—-one of the  highest on record—and  is  maintaining the current forecast  for the  current  season  within  the  range of  $5.90-$6.90.

Turnover  was up 5%  at  $21bn, equating  to 6.8%  of  NZ’s  GDP—with  $11bn returned  to  suppliers.

Not  a  word  out of the  Beehive,  despite the  result  underlining   the  importance  of  the  dairy  industry  to the  national   economy.

But  Federated  Farmers’  Andrew  Hoggard  speaks for  the rural  community  when he says  “There’s good, positive  momentum going  forward…it  will  lift   a lot of people’s spirits”.   Continue reading “A cheering result from Fonterra, but there are challenges ahead”