It is still too early for Fonterra's top brass to perform a victory roll.
But after more than 18 months in the trenches, this week's record profit has at least lifted confidence among the co-operative's leadership that their strategies are bearing fruit.
Chairman John Wilson and CEO Theo Spierings willbe the first to tell you they can't afford to take their eyes off the ball.
It will be a long time - some say forever - before global milk powder prices bounce back to the giddy heights when Fonterra's payout hit $8.40kg/milksolids. That was back when all manner of investors were plunging into dairy on the back of the "White Gold Rush" - a phenomenon so marked that New Zealand earned itself the soubriquet "the Saudi Arabia of milk".
The language around global dairy is a good deal more sombre now, despite the recent firming of milk powder prices.
Dairy farmers, who didn't bother too much with financial planning when the hefty milk payouts rolled in, have since become wedded to their budgets and cutting expenses to offset the major drop in revenue they have suffered through the lengthy dairy commodity slump.
It's a fundamental shift in how dairy gets done at the grassroots.
At Fieldays two years ago, 44 per cent of farmers who took part in a survey said they did not have a written forecast or budget. Xero used this to market its online accounting software to farmers, to help them budget accurately and be more aware of their financial situation.
Bankers are also intimately aware of just how exposed their individual farming customers are.
At Fonterra, they have also been cutting the fat. But at the same time, they are focused on shifting volume growth in the NZ milk pool directly into the highest-returning products that Fonterra makes under its own valuable brands.
As Spierings has made clear, the company will then use its other milk pools around the world to serve in-market customers for ingredients.
Operationally, this means: optimising New Zealand milk; growing consumer positions; delivering on the potential of the food service and Anlene businesses; developing leading positions in paediatric and maternal nutrition; selectively investing in milk pools; and aligning Fonterra's business and organisation.
This week both Wilson and Spierings put some more detail around their strategies.
The company has foreshadowed an indicative payout level of $5.65/kg of milksolids for the 2017 season. This is for "budgeting" purposes.
Fonterra Chairman John Wilson. Photo / Jason Oxenham
The transformation is now said to be "unlocking value".
But it is what happens in the global arena that drives the milk price.
Fonterra's contention is that supply and demand are coming into balance again. Inventories are adjusting: in New Zealand there are record low inventories and in China customer inventories are back to normal.
But the NZ dollar is still strong, which impacts on Fonterra's revenue, given that the global trade is mainly priced in US dollars.
At the global level, the trade embargo with Russia is still in place, but in China dairy imports are up 21 per cent over the past three months.
As prices have firmed on the GlobalDairyTrade platform, some of the anger in the sector has dissipated.
In May, The Australian ran a speculative story saying Spierings was about to depart, "with Air New Zealand chief executive Christopher Luxon earmarked as his most likely replacement".
Ironically, four months on, both chief executives have reported record profits at their respective companies.
The speculation has subsided.
Since the global commodities slump began, Wilson has moved to become the public face of the co-operative. He has absorbed farmer anger and acted as a "shock absorber" in shareholder meetings.
The Fonterra directors have been fully challenged during the tumultuous times of the dairy slump.
Shareholders no longer bay for his blood.
Spierings has been leading the transformation of the company, including its Disrupt programme.
Some 4000 "transformation" initiatives delivered $2.2 billion in free cash flow, of which $1.6b was used to reduce Fonterra's debt to $5.5b, lowering its debt gearing ratio to 44.3 per cent from a record 49 per cent the previous year.
Spierings is also confident that Fonterra is well-positioned in every segment in China.
But it is fair to say the company will need a compelling e-commerce strategy if it is to keep pace in that increasingly competitive market.
The Fonterra directors have been fully challenged during the tumultuous times of the dairy slump.
It is important to acknowledge here the contribution of former independent director John Waller, who retired from the board on August 31 after having served as a director with the dairy giant since 2009.
Wilson said at the time that Waller was retiring to reduce his workload. He had chaired Fonterra's fair value share review committee, the trading among farmers due diligence committee and the milk price panel, and was a member of the audit and finance risk committees.
"John has been an outstanding director of our co-operative and has made an invaluable contribution by combining his strong personal values, drive and leadership with commercial commonsense," Wilson said.
Waller died this week.
He had also served as BNZ's chairman. "John's business career was an outstanding one. It was characterised by the exercise of a brilliant mind, achievement and influence, often during the most challenging of times," said BNZ CEO Anthony Healy.
"As an expert in managing business insolvencies, he arrived at the BNZ just as the global financial crisis was taking hold - bringing with it the prospect of insolvency for the world's financial system as a whole.
