Highlights from Fonterra's half-year results with Mike Cronin

Photo / File

Content brought to you by Fonterra.

It has been a busy time for Fonterra, as the co-op released its half-year results on Wednesday this week.

Overall Fonterra had a positive first half of the year, Managing Director for Co-operative Affairs Mike Cronin told The Country Sport Breakfast's Jason Pine.

"The team's pretty pleased with our results for the first six months of our 2021 financial year."

Although there were "a whole lot of numbers" to wade through in the results, there were three highlights that stood out for Cronin.

The first number was Fonterra's Normalised EBIT, which was up $100 million to $684 million.

"The reason I like that number is because it really gives a sense of the underlying performance of our business, it takes out all the noise and the distraction of the one-offs and just overall shows we're on track and making good improvements," Cronin said.

The second number that stood out for Cronin was Fonterra's gross margin.

"That's the percentage left over of your revenue once you take your costs out."

Although a rise from 16 per cent to 17.4 per cent "doesn't sound like a lot," it was still a "pretty good performance," he said.

Cronin's third number was Fonterra's operating expenditure which was down $37 million.

"When you translate that through for the [Fonterra] farmers ... that's the strong Farmgate Milk Price midpoint at 7.60 per kilogram, the interim dividend of 5 cents that we announced and then supported by the earnings guidance of 25-35 cents [per share]."

Listen below:

Star performers

When it came to a standout performer, It was hard to look past Greater China, Cronin said.

The team had delivered a 38 per cent increase in EBIT to $339 million with a "really strong foodservice business up there," he said.

China's strong economic recovery following the initial impact of Covid-19, meant it continued to be one of Fonterra's most important strategic markets, Cronin said.

"We've made a lot of progress there by really pushing innovation and we're going to have to continue to do that because there's a lot more ways we can bring the goodness of New Zealand milk to Chinese customers."

Also in today's interview: Cronin reflected on a tough year for the co-op with Covid-19 lockdowns both in New Zealand and overseas. He also talked about what Fonterra farmers could expect for the second half of the year.