Home' Northern Outlook : April 6th 2013 Contents 9
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SERVICING THE DAIRY INDUSTRY SINCE 1922
Let's Talk Dairy
Half year 'tonic'
slowly drying up
IN CHARGE: New Fonterra chairman
John Wilson, right, with his farm
manager and business partner, Michael
DAIRY GIANT Fonterra is warning
that its strong first-half earnings
could be a one-off for the year as
drought bites deep into milk pro-
duction and the outlook for second-
Fonterra lifted its struggling
farmer-shareholders spirits with its
results for the six months to January
31, which delivered a 30c/kg milk-
solids increase in milk payout fore-
cast to $5.80/kg milksolids, and
higher advance payments to relieve
The combination should mean, on
average, $100,000 in income is
delivered earlier than expected to
farmers, although the company
acknowledged it has probably
already been spent on emergency
For unit investors in the recently
listed Fonterra Shareholder Fund
and Fonterra s farmer-shareholders,
the half-year results were generally
The unit price rose 5 per cent to
$7.35 after the announcement.
Net profit after tax at $459 mil-
lion, was 33 per cent up on the same
period last year.
Record first-half milk flows were 6
per cent up, and the interim dividend
lifted from 12c to 16c a share. The
full-year dividend forecast was
unchanged at 32c a share.
Total sales volumes were 2.1 mil-
lion metric tonnes, an increase of 8
The new payout forecast for the
2012-2013 season was possible
because of a surge in global dairy
prices in the past two months as
world buyers reacted to drought in
New Zealand and the United States,
and weak European milk production.
It was also bolstered by a 9 per
cent lift in sales by Fonterra s NZ
Milk Products commodity and
ingredients export business, and
improvements in its Asian and Latin
But revenue at $9.3 billion was
down 7 per cent on the corresponding
period, a reflection of lower com-
modity prices before the drought,
and the strength of the kiwi dollar.
New chairman John Wilson, while
declaring the board satisfied with
the result, said a repeat was
With all the North Island and
parts of the South Island gripped by
drought, many of Fonterra s
12,000-odd suppliers had been forced
to dry off their herds early.
Although there were some stellar
divisional ebit performances, includ-
ing NZ Milk Products and in the
Asia/Africa/Middle East business,
the Australian side of the business
was clearly under pressure with
EBIT 32 per cent down at $98m.
-- Fairfax NZ
McCaw on milk trail
AMBASSADOR: Richie McCaw at the
launch of Fonterra's milk in schools
programme earlier this year.
FONTERRA S GLOBAL ambassador
Richie McCaw got a close view of
Fonterra in Sri Lanka during a two-
day tour of the co-operative s opera-
tions in the country.
The All Blacks captain said it was
great to see first-hand how Fonterra
was growing its business in the
It s my first time in Sri Lanka
and it made me realise how big
Fonterra and Anchor are in the
region. You drive through Colombo
and see Anchor signs everywhere --
it s amazing that Sri Lankan kids
are drinking the same milk that I
grew up on in Canterbury.
You sometimes forget that
Fonterra s got such a global reach.
The kids and farmers that I met dur-
ing the trip all told me that Fonterra
and Anchor are a big part of their
lives -- not only because of the
products Fonterra supplies but
because the co-op has become part of
the community over the last 35
years, he said.
While in Sri Lanka, Richie toured
the co-operative s milk processing
facilities and saw some of Fonterra s
community and farmer-development
initiatives. He also spent time meet-
ing some of the co-operative s key
stakeholders in the country.
Co-operative affairs managing
director Todd Muller said that
McCaw s visit helped demonstrate
Fonterra s commitment to Sri Lanka
-- a key export market for the New
Zealand dairy industry.
Sri Lanka is our fourth largest
whole milk powder market and criti-
cal to Fonterra s global business, Mr
The New Zealand dairy industry
has been providing high quality
dairy nutrition to people across Sri
Lanka for more than 35 years and
today, two packs of Anchor milk pow-
der are bought every second.
Sri Lanka has a large and fast
growing population which is becom-
ing increasingly affluent.
This is driving dairy consumption
growth with people increasingly
looking for high quality nutrition
that supports the health and well-
ness of their families.
This provides a clear opportunity
for Fonterra to continue to grow its
presence in this important market.
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