Fonterra revenues fall 15% while net profits rise 183%

Fonterra Co-operative Group said net profit after tax rose 183% (to NZ$506 million) for the financial year ended 31 July 2015. Revenues fell 15% to NZ$18.8 billion as total sales volumes increased 9% to 4.3 million metric tons.

Chairman John Wilson said “extremely challenging trading conditions globally” had affected all parts of the co-operative’s business.

“Falling global dairy prices due to a supply and demand imbalance impacted the Milk Price, while the dividend reflected higher funding costs following significant investment in capacity to support milk growth in New Zealand, essential investments in the key strategic market of China, and the costs of maintaining a higher Advance Rate through the season.”

“The strengthening of performance in the second half resulted in normalized earnings before interest and tax almost doubling, with good growth in our consumer and foodservice businesses and the results of a major push in our ingredients business to offset low milk prices with improved margins.”

Wilson said that despite drought in some regions and floods late in the season, milk collection across New Zealand for the 2014/15 season to 31 May 2015 was 1,614 million kgMS, up 2% on the previous season.

Chief Executive Theo Spierings said improved second half results in the 2015 financial year were driven by a strong focus on cash and costs.

“We focused on improving our sales mix, achieving more efficiencies, maximizing our gross margins and achieving our strategic goals faster. Our efforts contributed to a second half rebound in our performance and profitability.” 

Click to view Fonterra's Annual Results presentation, the Annual Review and the Financial Statements & Statutory Information.

Earlier this month, the co-op said it officially opened a new blending and packing plant in Indonesia – its first manufacturing facility in the country.

Global dairy group publishes sustainability report

Global Dairy Agenda for Action (GDAA), which provides governance for the global dairy sector’s efforts in addressing its sustainability challenges, announced the publication of its inaugural Dairy Sustainability Framework (DSF) Annual Report, the dairy sector’s program to align, connect and demonstrate continuous improvement in sustainability.

Download the Dairy Sustainability Framework Annual Report here.

Launched at the World Dairy Summit in Yokohama in October 2013, the DSF was developed as part of a wider sector effort to continually improve sustainability performance and transparency. The dairy sector globally has responded positively to the introduction of the DSF, with first year membership quickly growing to 41 Implementing and Affiliate members.

“Over the past year, we have improved our understanding of the way the DSF works around the world, and we are learning to work well together across our different geographies,” said Brian Lindsay, Development Director for the DSF and the Sector Lead for Sustainability. “We hope our first Annual Report will serve to encourage dialogues between the dairy sector and our sustainability stakeholders.”

The report outlines how members, who currently represent 17% of global milk production and over half a million farmers with a total of nearly 18 million cows, will report on their own sustainability initiatives within 11 set criteria. These categories are to be prioritized at the local/regional level with participants tracking initiatives along a continuous improvement spectrum. Many of these initiatives already have targets set against them and will be reported on in an aggregated manner in future DSF Annual Reports.

“The framework that the DSF has created provides a good foundation for our own sustainable developments,” said Implementing Member Tobie de Villiers, General Manager, Milk Procurement for South Africa’s Clover SA (Pty) Ltd. “We learn a lot from sustainable research and development projects from all over the world.”

The DSF is the result of an 18-month dairy industry research project driven by the signatories of the GDAA – European Dairy Association (EDA), Eastern and Southern African Dairy Association (ESADA), Pan-American Dairy Federation (FEPALE), Global Dairy Platform (GDP), International Dairy Federation (IDF) Sustainable Agricultural Initiative Platform (SAI), Dairy Australia and the Innovation Center for US Dairy. With the help of UK–based think tank/consultancy SustainAbility, the DSF was created on the foundation of more than 100 individual interviews, several global meetings/workshops and reviews of more than 80 dairy and 20 non-dairy sustainability initiatives from all over the world.

“The DSF enables the GDAA to take a holistic approach to sustainability through an alignment of international sustainability activity,” said Donald Moore, Chairman of the GDAA and Executive Director of Global Dairy Platform. “In this way, participants share a “common language” that allows for coordination among groups working on similar objectives, the ability to connect and share experiences, and an opportunity to accelerate progress to improve performance.”

The report will be launched on 21st September at the GDAA Reporting Session during the World Dairy Summit in Vilnius, Lithuania. Current DSF members will be discussing their experiences of working with the Framework during the session.

Kura dairy powders from New Zealand are GMO-free

Dairy protein from New Zealand is being marketed in the United States by Kura. The non-GMO powders are available in vanilla, chocolate and berry flavors. The company sells the products online on Amazon and at select retailers, including Sprouts and Whole Foods. Each one-pound, nine-ounce pouch retails for $19.99. 

Arla plans growth in Africa with joint ventures in Nigeria, Senegal

Arla continues its expansion in Africa with two new joint-ventures in Nigeria and Senegal. The new joint venture in Nigeria will carry the name TG Arla Dairy Products LFTZ Entreprise. It is owned 50% by Arla Foods and 50% by Tolaram Group. The company will handle packaging, marketing, sales and distribution of Arla products in Nigeria. Mads Burmester has been appointed as managing director of the company 

The jv in Senegal is called Arla Senegal S.A., and it is owned 75% by Arla Foods and 25% by Attieh Group. The joint venture will handle packaging, marketing, sales and distribution of Arla products in Senegal, and is expected to be operational before the end of this year.

In other news, Arla Foods appointed Natalie Knight as the new chief financial officer of the European dairy cooperative effective January 2016. She will also become a member of Arla Foods Executive Management Group. Currently, Knight is the Senior Vice President Finance in the adidas Group.

Enter the World Cheese Awards; deadline is Oct. 18

The 2015 World Cheese Awards is now open for entry at www.gff.co.uk/wca. The organizers call it “an opportunity for small artisan producers to spotlight their cheese on a world stage.” Entry deadline is Oct. 18. Judging starts on Nov. 26.