Dairy Giant Fonterra Posts Huge Profit After Revamp

New Zealand dairy giant Fonterra posted a bumper annual profit Friday, putting the world's largest dairy exporter back in the black after two years of heavy losses.

Fonterra announced a net profit of NZ$659 million (US$445 million) for the 12 months to July 31, rebounding from a NZ$605-million loss the previous year.

The turnaround comes after Fonterra restructured its operations to focus on core business after last year writing down more than NZ$800 million in assets, including slashing the value of investments in China.

Fonterra said shareholders would receive a final dividend of five cents a share, ending a suspension on payouts that began in 2019.

"We increased our profit after tax by more than NZ$1.0 billion, reduced our debt by more than NZ$1.0 billion and this has put us in a position to start paying dividends again," chief executive Miles Hurrell said.

He said Fonterra experienced a strong first half to the financial year but the Covid-19 pandemic affected the second half.

"As we moved through the second half, we saw restaurants, cafes and bakeries close and intermittent spikes in supermarket sales, creating uncertainty across the global dairy market," he said.

Chairman John Monaghan said the health crisis made providing a detailed outlook difficult as new waves of infection and the virus-induced global slowdown would affect demand in unpredictable ways.

"The best way of coping with uncertainty is to stay on strategy and focus on what is within our control --- delivering for our farmers, unit holders and customers, and maintaining our financial discipline," he said.

"We need to stay agile and draw on our strengths across the supply chain to manage and adapt to the changing global situation."