Fonterra Co-operative Group Reports Strong FY24 Results and Special Dividend
FSF (FSF) Share Update September 2024 Tuesday 24th
Fonterra Announces Strong FY24 Results with Special Dividend
Fonterra Co-operative Group Limited has announced its financial results for the fiscal year ending 31 July 2024, showcasing strong performance and declaring a special dividend for its shareholders.
Instant Summary:
- Revenue from continuing operations: NZD 22.822 billion, a 7% decrease.
- Total revenue: NZD 22.994 billion, a 12% increase.
- Net profit from continuing operations: NZD 1.168 billion, a 6% increase.
- Total net profit: NZD 1.128 billion, a 2.8% increase.
- Final dividend: NZD 0.40 per equity security.
- Special dividend: NZD 0.15 per share.
- Final Farmgate Milk Price for 2023/24 season: NZD 7.83 per kgMS.
Financial Performance
Fonterra Co-operative Group Limited has reported strong financial results for the fiscal year ending 31 July 2024. The company achieved a net profit from continuing operations of NZD 1.168 billion, representing a 6% increase from the previous year. Total net profit stood at NZD 1.128 billion, marking a 2.8% increase.
Total revenue for the year was NZD 22.994 billion, a 12% increase, while revenue from continuing operations was NZD 22.822 billion, reflecting a 7% decrease from the prior period. The Co-op's earnings before interest and tax (EBIT) from continuing operations were NZD 1.560 billion.
Dividend Announcement
Fonterra has declared a final dividend of NZD 0.40 per equity security, with a record date of 2 October 2024 and a payment date of 11 October 2024. Additionally, the company announced a special dividend of NZD 0.15 per share, reflecting its strong earnings performance and efficient capital management.
Operational Highlights
The Co-op reported a return on capital of 11.3%, exceeding its target range for FY24. Full-year milk collections totaled 1,471 million kgMS, and the final Farmgate Milk Price for the 2023/24 season was NZD 7.83 per kgMS. Fonterra's balance sheet remains robust, with net debt reduced to NZD 2.6 billion, down NZD 600 million from the previous year.
Strategic Review and Future Outlook
Fonterra completed a strategic review this year, reaffirming the importance of its Foodservice and Ingredients channels. The company is exploring divestment options for its global Consumer business, as well as Fonterra Oceania and Sri Lanka. Advisors have been appointed to assist with this process, which aims to maximize value for farmer shareholders and unit holders.
Looking ahead, CEO Miles Hurrell expressed confidence in the Co-op's ability to continue delivering strong returns and growing long-term value. The company plans to share its revised strategy and expected outcomes with shareholders and unit holders in the coming week.
The strong financial performance and the announcement of a special dividend are likely to positively impact Fonterra's stock price. The company's robust earnings and efficient capital management demonstrate its resilience and ability to generate shareholder value. However, the strategic review and potential divestments may introduce some uncertainty in the short term.
Investor Reaction:
Analysts are expected to react positively to Fonterra's strong financial results and the special dividend announcement. The company's focus on efficiency and balance sheet strength is likely to be well-received. However, the potential divestments may lead to mixed reactions as investors assess the impact on Fonterra's long-term strategy.
Conclusion:
Fonterra's strong FY24 results and special dividend announcement highlight the Co-op's resilience and ability to deliver value to its shareholders. Investors should stay informed about the company's strategic review and potential divestments to understand their impact on future performance. Fonterra's continued focus on efficiency and balance sheet strength positions it well for future growth.