BUSINESS UPDATE VIDEO
GLOBAL DAIRY UPDATE
The Ingredients segment represents the ingredients businesses in New Zealand, Australia and Latin America. This segment also includes the Co-operatives corporate activities and Farm Source (formerly RD1), a rural supplies retailer in New Zealand
Our New Zealand ingredients business delivered a solid performance with normalised EBIT for the year of $973 million, up 43 per cent. This was mainly due to improved margins which were up $264 million. We adjusted our product mix away from reference products such as Whole Milk Power towards non-reference products such as cheese and casein, and took advantage of better pricing opportunities in Japan and the United States. Despite significant volatility in dairy prices, the ingredients segment delivered a return on capital of 9.3 per cent.
CONSUMER & FOODSERVICE
The Consumer and Foodservice segment represents the consumer brands and foodservice businesses in Oceania, Asia, Greater China and Latin America.
Our consumer and foodservice segment delivered a strong result with normalised EBIT of $408 million, up 216 per cent, and like-for-like volume growth of three per cent compared to last year. Growth in normalised EBIT was mainly due to a record performance from our key markets, Asia and Greater China, with a strong volume increase. In Asia, foodservice delivered combined volume growth of 11 per cent across the region.
International Farming represents China farming operations
Farming hubs are a key part of our strategy to become a more integrated business in China. China is a key strategic market for Fonterra and we are committed to participating in the development of the local dairy industry. We have two farming hubs with a total of seven farms. In total we have 25,000 milking cows and 29,000 heifers and calves across all our farmers, supporting our growth. Sales volume of raw milk for the year was 164,000 MT, or around 12 million kgMS for the year.
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