Fonterra has this morning revealed strong results for the first quarter of the 2024 financial year.
That's good news for farmers, with the dairy giant expecting to pay suppliers more.
The dairy giant made a profit after tax of $392 million for the quarter from continuing operations. That figure excludes the impact of selling DPA Brazil, a joint venture between Fonterra and Nestlé, to French dairy company Lactalis.
"Including discontinued operations, FY24 Q1 Total Group profit after tax was $346 million," Fonterra said.
The company's earnings before interest and taxes is up 63% to $575 million.
The forecast midpoint for the Farmgate Milk Price this season is up from $7.25 to $7.50 per kilo of milk solids (kgMS). The forecast range is shifting from $6.50-$8 per kgMS to $7-$8 per kgMS.
Fonterra CEO Miles Hurrell said the company's gross margin up from 15.5% this time last year to 21.4%.
"Looking ahead, we expect these higher margins to continue throughout the first half of the year, before tightening across all three sales channels in the second half of the year, due to higher input costs and the gap between reference and non-reference product prices narrowing," he said.
"Our increased forecast earnings guidance of 50-65 cents per share reflects this and we are on track for a strong interim dividend.
"We are pleased with the results for the first quarter of FY24 and see positive momentum across our business as we work towards our 2030 goals."
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