Fonterra has announced record financial results for 2011 - including revenue of $19.9 billion - boosted by a bumper year for dairy exports and strong contributions from overseas businesses.
The record financial performance and record milk production meant the dairy co-operative will distribute milk payments and dividends totalling $10.6 billion - $2.4 billion more than in 2010 and $1.5 billion more than its previous best year in 2008.
That money flowed "right back into the local economy" as farmers reinvested and bought more farm supplies and equipment, chairman Sir Henry van der Heyden said.
Fonterra, which marks its 10th anniversary this year, announced a record payout (before retentions) of $8.25, comprising a farmgate milk price of $7.60 a kg of milk solids for the 2011 season and a distributable profit of 65c per share for the financial year.
The payout (before retentions) was $1.55 ahead of the previous period's $6.70 and exceeded the previous record of $7.90 achieved in 2008.
The cash payout (farmgate milk price plus dividend) of $7.90 was also a record and $1.53 higher than the prior period's $6.37.
Other highlights included a 13% increase in after-tax profit from $685 million to $771 million and a 19% increase in revenue from $16.7 billion to a record $19.9 billion.
The annual dividend is 30cps, a 3cps, or 11%, increase on last year's 27cps.
Fonterra collected a record 1346 million kg ms of raw milk in the 2011 season, 5% higher than the previous season. Dairy exports for the year totalled 2.1 million tonnes.
The financial results reflected an improved performance by Fonterra's ingredients businesses, which export to more than 100 markets, as well as by overseas consumer businesses, especially across Asia and the Middle East.
However, consumer business profits in New Zealand and Australia were down in a tough market environment.
The record farmgate milk price reflected the recent strength of world dairy markets.
In addition, Fonterra's hedging policy shielded farmers from the full brunt of a stronger New Zealand dollar, especially over the latter stages of the year.
"We also benefited from record milk production, as some of the best autumn conditions in recent years offset poor weather in many regions earlier in the season," Sir Henry said.
Although the business was affected by higher dairy ingredient prices and a fragile global economy, Fonterra's underlying profitability showed solid growth over last year, due to improvements within its ingredients businesses and the strength of its consumer brands, outgoing chief executive Andrew Ferrier said.
Fonterra's board has confirmed its previously announced forecasts for the current 2012 season and 2012 financial year.
The forecast farmgate milk price is $6.75/kg ms and the forecast distributable profit range is 40-50cps. The lower forecast farmgate milk price relative to 2011 reflected a softening of global commodity prices since early 2011.
Fonterra yesterday published its farmgate milk price manual, setting out the way it calculated the amount paid to farmers for milk. It also published a farmgate milk price statement for the season ending May 31.
The figures demonstrated "what Fonterra has been saying all along" - that the price New Zealand farmers were paid for milk, which in turn flowed into retail dairy prices, reflected global prices for dairy commodities, Fonterra's chief financial officer, Jonathan Mason, said.
