Its normalised net profit after tax lifted 61% to $587 million for the nine months ending April 30, while its reported net profit after tax was $603m, up 2%.
Its total group normalised EBIT was up 18% to $959m, due to higher margins and reduced operating expenditure.
Fonterra chief executive Miles Hurrell says the co-operative has lifted its financial performance despite the challenges around covid-19.
“I couldn’t be prouder of how our employees and farmers are working together,” Hurrell said.
Fonterra’s ongoing financial discipline is also a big part of its third-quarter performance story. Its operating expenses are down 5% year-to-date, but it was planning additional expenditure in the final quarter to support its brands and product initiatives for next year.
“Our debt reduction over the last couple of years and lower interest rates have reduced our interest bill by $69m for the nine months ending April 30, 2021,” he said.
Fonterra is maintaining its normalised earnings guidance of 25-35c per share.
While year-to-date normalised earnings per share are 34c, it is expecting earnings in the fourth quarter to come under further pressure and is providing guidance that its full year earnings are expected to be more towards the midpoint of the range.
China’s year-to-date EBIT was $457m, up 30% or $106m, year-on-year. Foodservice was the big driver behind this result, contributing $93m of the growth.
Asia Pacific’s EBIT of $224m was down 10% or $24m and AMENA’s (Africa, Middle East, Europe, North Asia and America) normalised EBIT of $322m was down by 11% or $40m.
Hurrell says there are some clouds on the horizon when it comes to Fonterra’s earnings performance.
The stronger gross margins seen so far this year as increasing raw milk prices flowed through to input costs and the pricing lags on sales contracts with customers delayed the co-operative’s ability to pass through the increase in its input costs.
“All of this means the fourth quarter will be challenging from an earnings perspective, and we expect the margin pressure to continue into the first quarter of the 2022 financial year,” he said.