Fonterra reports 18% rise in 2013 net earnings

Fonterra, a New Zealand-based multinational dairy co-operative, has reported an 18% rise in net earnings to NZ$736m ($608m) for the full-year 2013, compared with NZ$624m in 2012.

The co-operative posted a rise in profit despite a widespread drought and difficult trading conditions in Australia.

Fonterra stated that strong EBIT growth in Asia, Africa and the Middle East helped it overcome weakness in New Zealand and Australia.

For the year ended 31 July, net revenues were down 6% to NZ$18.6bn, while earnings before interest and taxes (EBIT) fell 3% to NZ$1bn.

Fonterra chief executive Theo Spierings said that the company made good progress with its strategy during the year, particularly in foodservice, everyday nutrition and advanced nutrition.

"The combined impact of the drought and the reshaping of Fonterra’s Australian business, saw the co-operative’s normalised EBIT of $1bn for the 2013 year fall 3% short of last year," Spierings added.

"Although the New Zealand consumer business grew its earnings in a tough trading environment, Australia faced heightened competition for lower milk volumes, and continuing margin squeeze for consumer brands."

Fonterra also announced that it is moving ahead with plans to strengthen its presence in China with the launch of its own branded milk formula, despite a recent botulism scare.

Spierings was quoted by Reuters as saying, "We reviewed our plans after the (botulism) crisis. We reviewed whether we should delay it, and we said ‘No’, so it’s full steam ahead."

In August, Fonterra’s products were at the centre of a global contamination scare that triggered a recall and temporary ban on imports of the products in countries including China, Russia and Sri Lanka.

However, the Ministry for Primary Industries (MPI) of New Zealand later said that tests showed that the implicated products did not contain botulism-causing bacteria.

Fonterra noted that it conducted investigations and is following the recommendations made by the review to improve quality control.

---

Image: Fonterra said that strong EBIT growth in Asia, Africa and the Middle East helped it overcome weakness in New Zealand and Australia. Photo courtesy of Fonterra Co-operative Group.