Fonterra said it was sticking with its earnings per share forecast of 20-35c for the current financial year, despite the pressure that higher milk prices was putting on profits.
Chief executive Miles Hurrell told the co-op's annual meeting in Masterton that there was still uncertainty as a result of the Covid-19 pandemic.
"But we're seeing good demand for dairy from China and milk powders, in particular, are proving resilient," he said.
Strong demand had allowed the co-op to increase the mid-point of the forecast farmgate milk price range to $6.80/kg last month.
The co-op has still given itself plenty of wriggle room - 50 cents above or below the mid-point.
Among the unknowns were the exchange rate, milk supply in the US and the EU, and the impact of Covid-19 on the global economy and on demand.
Milk prices - Fonterra's biggest input cost - have an impact on its earnings.
"Obviously, the higher milk price puts extra pressure on our earnings but we remain confident in our forecast earnings range [which] is 20–35 cents per share," Hurrell said in notes prepared for delivery at the meeting.
The forecast assumed that Asia and Greater China would drive an improved trading performance as Covid-19 restrictions eased.
The second assumption was that there would be lower financing costs and less significant one-off items, like impairments.
"And we are also assuming that we won't see the same kind of price relativities between reference and non-reference products in Ingredients as we did in the second half of 2020 when the milk price softened," he said.
"Whether or not these assumptions eventuate is not 100 per cent certain."
Outgoing chairman John Monaghan said the year marked a return to paying dividends, a position the co-op expected to maintain in the future.
At 5 cents per share, the dividend was at the lower end of the 5- to 7-cent range calculated under the board's guidelines.
"In the context of so much uncertainty, distributing a 5 cent dividend is a prudent decision and one that balances our aims of further reducing debt and distributing earnings," he said.
In his review of the year, Hurrell said Fonterra's earnings per share number of 24c came in at near the top of the co-op's 15-25 cent guided range.
Hurrell highlighted the co-op's $1.1 billion fall in debt as being significant.
"It's helped get our balance sheet in a much healthier state and it's also helped us exceed our 2020 Debt/ebitda target, coming in with a debt level of 3.4 times our ebitda," he said.
"The $1.1 billion debt reduction meant we weren't drawn away from what needed to be done to manage the challenges we faced."
In June, the board selected former Zespri chairman Peter McBride as Fonterra's chairman-elect.
McBride took over as chairman at the end of today's meeting.