Fonterra gains 38% in H1 earnings

"Our standout performer continues to be the Greater China market," Fonterra CEO Miles Hurrell said. "As shown through our results today, the Greater China market continues to be one of our most important strategic markets. We remain committed to growing the value of our Greater China business, which we'll do by bringing the goodness of New Zealand milk to Chinese customers in innovative ways and partnering with local Chinese companies to do so."

Speaking on the group's 2021 Interim Results, the CEO said the co-op has had a great first six months of the 2021 financial year with total group normalised earnings before interest and tax up NZ$100 million to NZ$684 million, a total group normalised gross margin of 17.4 percent, up from 16 percent and total group normalised operating expenditure down NZ$37 million.

As part of Fonterra's continuous review of its asset portfolio, Fonterra has decided to undertake a sales process for joint venture farms in China.

Hurrell said as with Fonterra's own China farms, the decision to sell the joint venture farms is in line with the co-op's strategy to focus on New Zealand milk.

"We expect the sales of our farms to be completed this financial year and the sale of the JV farms to be completed this calendar year."

Fonterra also has continued to reduce its shareholding in Beingmate, which on Jan 31 was sitting at 3.94 percent and is now 2.82 percent.

Hurrell says Fonterra will continue to sell down its remaining shareholding and expects to have fully exited this investment before the end of this financial year.

"Fortunately, we are in a position, New Zealand dairy is proving to be resilient in a COVID-19 world. It's a staple in people's diets around the world and demand is strong, Hurrell said, referring to the second half of the financial year.

"Despite a strong first half, we are expecting our earnings performance to come under significant pressure in the second half," he said.