-New Zealand’s Fonterra posted a 25% drop in its fiscal 2024 profit on Wednesday, hurt by poor earnings from its ingredients segment and volatility in demand from key importing regions, but declared a special dividend, sending its shares higher.
Improvement in earnings from its food service and consumer segments due to higher sales volumes was offset by a decline in earnings from the ingredients business as prices eased compared to last year.
Sales and import volumes into China also slowed largely due to increased local production of fresh milk.
The dairy firm declared a final dividend of 25 NZ cents per share as well as a special dividend of 15 NZ cents apiece.
Shares of the co-operative group climbed as much as 3.7% to its highest level since July 16, 2021, while the broader market traded flat.
“Investors may be more interested in the special dividend of 15 (NZ) cents per share,” said Tom McBride, a financial adviser at Hamilton Hindin Greene.
“Strength in the Global Dairy Trade auctions and constrained milk supply affecting many of the key producing regions are positive signals to investors,” added Tom.
Fonterra expects earnings for fiscal 2025 between 40 and 60 NZ cents per share.
The Auckland-based company reported earnings from continuing operations for fiscal 2024 of 70 NZ cents per share, hitting the top end of its outlook range provided earlier this year.
The dairy exporter also hiked its 2024/25 forecast farmgate milk price range – the price it pays to farmers for milk – to NZ$8.25-NZ$9.75 per kilogram of milk solids (kgMS), citing higher global dairy prices and constrained supply from key producing regions.
The company reported a final 2023/24 farmgate milk price of NZ$7.83 per kgMS.
The world’s biggest dairy exporter reported a profit after tax of NZ$1.17 billion ($741.66 million) for the year ended July 31, compared with NZ$1.58 billion a year ago.
($1 = 1.5775 New Zealand dollars)
(Reporting by Rajasik Mukherjee and Aaditya Govind Rao in Bengaluru)
