Fonterra plans further international growth of its branded products business and to look at more acquisitions after a strong performance for the 2009-10 financial year.
The dairy co-operative yesterday announced a final payout to farmers for the 2009-10 season of $6.37 a kg of milk solids after retentions of 33c a kg/ms, well ahead of the previous season's payout of $5.20 a kg/ms.
The payout for 2009-10 was made up of a milk price of $6.10 a kg/ms and a dividend of 60c a kg/ms, of which shareholders will receive 27c a kg/ms, with Fonterra retaining 33c a kg/ms.
Fonterra also reaffirmed forecasts for the current season of between $7 and $7.10 a kg/ms, with the milk price unchanged at $6.60a kg/ms, but the distributable profit range narrowed to between 40c and 50c a kg/ms.
Chief executive Andrew Ferrier said a stronger balance sheet would allow Fonterra in the coming year to focus on performance and efficiency, expand its global ingredients and food service business and look at strategic investments.
Revenue for the year to July 31 from the sale of goods was 4.3% higher than the previous corresponding period (pcp) at $16.7 billion because of $721 million in hedging gains and a strong contribution from the sale of commodities and ingredients.
The cost of goods sold was $700 million higher than pcp at $13.9 billion, reflecting the high milk price but leaving a slightly lower gross profit of $2.7 billion ($2.8 billion pcp).
The operating profit was higher at $1.022 billion ($922 millon pcp) and the profit before tax was $765 million ($542 million pcp). Earnings before interest and tax (ebit) was 9% higher at $1.1 billion.
Chairman Henry van der Heyden described the company's performance as good and the profit as solid, but he said the highlight was the strengthening of the balance sheet.
Debt gearing improved from 53% to 44.9% in part because of $862 million in equity, made up of $459 million in extra shares and higher retentions.
Mr Ferrier said business units performed well, with prices and volume growing.
Revenue from commodities and ingredients was 7% higher at $11.2 billion, but ebit was down from $548 million to $339 million because of the lag effect of being unable to pass on higher prices because of contracts.
Consumer business revenue grew for the fifth consecutive year to $5.5 billion, on the back of increased market share and growing sales in New Zealand, Australia, Asia, Africa and the Middle East and Latin America.
