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New Zealand's biggest exporter, the dairy giant Fonterra has unveiled its financial results for the six months to the end of January.

The payout forecast for the current season is unchanged from the forecast of $5.10 per kilogram of milksolids announced in late January. At this level, it would be Fonterra's third highest payout.

Because of a change to the annual balance date last year, the result has been affected by seasonal factors.

The latest half year covers the period August 2008 to January 2009 and includes two additional high production months - December and January, which the company says distorts comparisons with the previous half year which went from June 2007 to November 2007.

Revenue for the half year was up 9.6 per cent to $8 billion, but operating expenses were up 13 per cent.

If the numbers are adjusted for the change in timing and include foreign exchange hedging, total revenues would have fallen by 7.6 per cent, reflecting lower international dairy prices.

Debt ratios are expected to fall to "more normal levels" by the end of the year, says Fonterra, as working capital requirements ease due to the normal seasonal cycle and with other initiatives such as a freeze on non-essential capital expenditure.

Chairman Henry van der Heyden said the result was "satisfactory given the global economic meltdown and its impact on dairy markets."

"Despite this climate, our payout is still forecast to be $5.10, and our result shows Fonterra to be in reasonable shape given the turmoil in the world economy - it's a tough time for everyone and Fonterra is no exception. We have taken, and will continue to take, the tough decisions to manage the business prudently in the current climate and get our farmers the highest payout."

Fonterra has progressively cut this season's forecast payout from $7 to $5.10 per kg of milksolids, compared with last season's record $7.90 payout, 24c of which was retained to protect the balance sheet.

Westpac bank is forecasting $5.10 this season and, in its quarterly Agribiz update earlier this month, trimmed expectations for the 2009/10 season by 20c to $4.50.

The average payout during the 10 years prior to 2008 has been $4.21 per kg of milksolids.

The average price of whole milk powder increased 16.6 per cent in Fonterra's latest online auction, while the ANZ commodity index for dairy products dropped 5.6 per cent in February but stabilised during the second half of the month.

Fonterra thinks world dairy prices are "bouncing around in the trough".

Last season's record payout of $7.90 a kilogram meant an annual payout of $800,000 for the average dairy farmer.

- HERALD ONLINE