This is reflected in the final Price Earnings Ratio of $ 7.54, normalized earnings per share of 34 cents and final dividend of 15 cents, resulting in a total annual dividend of 20 cents per share. share.
The result comes when Fonterra goes through a business reset and moves to a new stage of increasing the value of the business.
The last three years have been about resetting the business.
Miles Hurrell, CEO of Fonterra, said: “We stuck to our strategy of maximizing the value of New Zealand milk, moved to a customer-driven operating model and strengthened our balance sheet.
Despite rising milk prices and narrowing margins in the final quarter, Fonterra’s strong performance allowed it to provide $ 11.6 billion to the New Zealand economy through full payments to farmers.
“The work done as part of the 2019 strategic reset means we are well-positioned to take advantage of the dynamics of the lucrative industry. Due to rising global demand for dairy products and supply constraints. The price of milk is high, “says Harrell.
“Our resilient supply chain has allowed us to bring our products to market, and farmers’ healthy demand for New Zealand milk has set the co-op’s shipping year to a record.
“We have continued to rebuild our business in China and the sale of joint venture farms and fully owned agricultural hubs. Our ongoing focus is to bring New Zealand milk to the world.”
Group-wide normalized EBIT, which reflects the underlying performance, increased 8% to $ 952 million, and group-wide normalized operating expenses decreased 3% to $ 2.2 billion.
The focus on financial discipline has paid off.
“Net liabilities fell $ 782 million to $ 3.8 billion, cash flow improved again and increased 2.7 times and is now within our long-term debt / EBITDA ratio,” said Hurrell. I am.
“The reported profit after tax was $ 599 million. Although it was down compared to last year, we benefited significantly from the sale of DFE Pharma and Foodspring in fiscal year 2020. Normalized profit after tax. Increased $ 190 million to $ 588 million due to improved earnings and lower interest expense.
“Our sales book is well-balanced across the region and many markets are doing well. In the Asia Pacific region, we have 28 normalized EBIT due to significant improvements in our food service and consumer channels. It increased by% to $ 305 million. We are expanding our food service footprint in the region and seeing its benefits, “he said.
According to Hurrell, progress is not limited to Fonterra’s financial performance.
“I’m proud of our efforts to reduce our environmental impact. New Zealand dairy products have the lowest carbon dioxide emissions in the world, but we also know that we need to do more. “He said.
“This year, Te Awamutu completed its first season with renewable wood pellets, reducing carbon emissions from coal by more than 11 per semto. Also, recently, the Sterling site has been regenerated since August next year. Announcing the move to renewable energy. Our farm owners are also working little by little, with record numbers reaching the top level of our collaborative difference framework, 53 of supply farms. % Currently has a farm environment plan. It’s good for the environment and it’s what our customers expect. “
Looking this season, Fonterra has announced a earnings guidance range of 25-40 cents per share for 2021/22, with a projected farmgate milk price range of $ 7.25 to $ 8.75 per kg MS for 2021/22. , Reaffirmed that the midpoint is $ 8 per kgMS. ..
Milk prices are likely to continue to rise, Harrell said.
“High milk prices are good for farmers and the New Zealand economy, but this can put pressure on our sales margins and impact our bottom line,” he said.
“We expect competitive tensions in the global shipping market to continue this year, thanks to the strength of our partnership with Kotahi, which has allowed us to keep our products moving throughout our supply chain. We were able to significantly reduce it. “
Fonterra is now looking to the next stage of its strategy as it has completed the reset and is focused on value growth. According to Harrell, the co-op is looking to 2030, so the fundamentals of dairy products, especially New Zealand dairy products, look solid.
“Simply put, the world wants what we have: high-quality, nutritious milk produced in a sustainable way, which reduces New Zealand’s total milk supply. It’s time to look like it’s likely to be flat at best, “he said.
“On the other hand, this requires a proper capital structure to keep the profits that generations of farmers have built up. This is a New Zealand-sized dairy cooperative.
“But on the other hand, it gives us more options for choosing what we do with our co-op milk. In doing so, for farmers and New Zealand in the next decade. You can increase the value you create in New Zealand, “says Hurrell.
“To achieve this, we have made three strategic choices: to continue to focus on New Zealand milk, to be a leader in sustainability and a leader in dairy innovation and science. is.”