Fonterra announces Strong FY20 Results despite COVID-19 Challenges

Fonterra CEO Miles Hurrell says 2019/20 was a good year for the Co-op, with profit up, debt down, and a strong milk price.

06 Oct 2020

3 min

#Global #All Categories #News #COVID-19

Fonterra recently announced its annual results, with a final Farmgate Milk Price of $7.14 per kgMS and a dividend of 5 cents per share for the 2019/20 season, bringing the final cash payout for farmers to $7.19 per kgMS. 

I’m proud of how farmers and employees have come together to deliver these strong results in a challenging environment. They have had to juggle the extra demands and stress of COVID-19 and have gone above and beyond. I would like to thank them for their hard work and support.

Miles Hurrell |CEO

"This time last year we were announcing our new strategy and customer-led operating model. We were clear that to build a sustainable future we needed to focus on three interconnected goals – Healthy People, a Healthy Environment and a Healthy Business."

Business Performance

The FY20 season proved to be a year of two halves, concluding with the delivery of all four priorities set by the Co-op. Building and solidifying a great team through a focus on culture proved critical in year that will be remembered for the global disruptions caused by COVID-19.

The Co-op has contributed around $11 billion into New Zealand’s rural economies through the milk price, fulfilling its continued goal of supporting New Zealand. This has also brought up the opportunity to rethink the Co-op's approach to community support, with the aim of helping more where it’s needed. This includes growing the KickStart Breakfast programme alongside Sanitarium and the New Zealand Ministry of Social Development, and partnering with the New Zealand Food Network to help get dairy nutrition to those who need it the most. 


of energy intensity reduced at NZ manufacturing sites.

The Co-op continued on its strong environmental run in 2020, delivering on its sustainability target to reduce energy intensity across New Zealand manufacturing sites by 20%, from a 2003 baseline. That’s enough cumulative energy saved to power all the households in New Zealand for 1.5 years.

Fonterra’s New Zealand on farm carbon footprint is approximately 1/3rd the global average, a result of continuous innovation and improvement in the way the Co-op operates. Some of the FY20 initiatives aimed at reducing our environmental footprint include switching from coal to wood pellets at Te Awamutu site, and increasing the number of supplying farms that have Farm Environment Plans from 23% to 34% since the start of the year. 


of supplying farms have Farm Environment Plans.

Farm walking through field looking at cows and mountain in background

Related reading...


NZMP Organic Butter carbonzero™ Certified Wins 'Most Innovative Dairy Product Award'

NZMP Organic Butter Carbonzero™ Certified Wins Sustainability Innovation Award


2021 A Year in Review


Despite tough economic challenges brought on by COVID-19 during FY20, Fonterra was able to reach its financial targets for the year. Results included normalised earnings of 24 cents per share, a Total Group normalised gross profit of $3.2 billion, a $181 million reduction in capital expenditure and a $1.1 billion reduction in debt. This brings the ratio of Debt to EBIDTA to 3.4 times our earnings, down from 4.4 times. 

Hurrell reiterated the important work done to strengthen the company’s balance sheet, which has allowed for renewed focus on managing COVID-19. Fonterra’s resilient global dairy demand, a diverse customer base and the ability to change and move product mix between markets has meant that the Co-op has been able to continue in its efforts to drive value.


Normalised Earnings / Share


Total Group Norm. Gross Profit


Reduction in Debt


Debt to EBIDTA

2020/21 Outlook

Looking out to 2020/21, earnings guidance range has been announced at 20-35 cents per share, with a Farmgate Milk Price range of $5.90-$6.90 per kgMS. Continued uncertainty around the global impact of COVID-19 on supply and demand has led to Fonterra maintaining their previous forecast range for the season.

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

John Monaghan | Chairman

FY20 Summary

  • Final cash payout for 2019/20 season: $7.19 per kgMS
    • Final 2019/20 Farmgate Milk Price: $7.14 per kgMS
    • 2019/20 dividend: 5 cents per share
  • Reported Profit After Tax: $659 million, up $1.3 billion
  • Normalised Profit After Tax1: $382 million, up $118 million
  • Total Group Earnings Before Interest and Tax (EBIT): $1.1 billion, up $1.2 billion
  • Total Group normalised EBIT: $879 million, up $67 million
  • Total Group normalised gross profit: $3.2 billion, up $200 million
  • Total Group normalised operating expenses: $2.3 billion, down $14 million
  • Free cash flow: $1.8 billion, up $733 million
  • Net debt2: $4.7 billion, down $1.1 billion
  • Debt to EBITDA ratio: 3.4x improved from 4.4x
  • Full year normalised earnings per share: 24 cents
  • 2020/21 forecast Farmgate Milk Price range: $5.90 - $6.90 per kgMS. Mid-point of $6.40 per kgMS
  • [1] Attributable to Fonterra’s equity holders and includes Continuing and Discontinued Operations.
  • [2] Debt means Economic net interest bearing debt. This measure of debt includes the capitalised amount of operating leases following changes to accounting standards, and transitioning to this new accounting standard added $581 million to our measurement of debt. However, this was partially offset by the transfer from borrowings to liabilities of disposal groups held for sale of $266 million of net debt for DPA Brazil and China Farms, as a result of being classified as Discontinued Operations.

Receive the latest NZMP news, insights & updates direct to your inbox