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WELLINGTON, Sept 22 (Reuters) - Dairy giant Fonterra Co-operative Group Ltd on Thursday reported a lift in its full year net profit despite challenges in global dairy markets.
The world's largest dairy exporter said net profit after tax was NZ$834 million ($612.91 million) in the year to July 31, up 65 percent on the year. Revenue was NZ$17.2 billion, down 9 percent.
"Our business strategy is serving us well. We are moving more milk into higher-returning consumer and foodservice products," said Chairman John Wilson in a release.
Wilson said the result meant an increased return on capital and a strengthened balance sheet, through significantly reducing debt.
Fonterra said its debt gearing ratio reduced to 44.3 percent from 49.7 percent while the return on capital increased to 12.4 percent from 8.9 percent.
Wilson noted, however: "Global milk prices remain at unrealistically low levels, but as the signs in the market improve, we are very strongly positioned to build on a good result in the year to come."
Global dairy prices are showing tentative signs of improvement, offering some relief to the beleaguered sector.
Until recently, dairy was the backbone of New Zealand's economy, representing around 25 percent of exports. But dairy prices have dropped sharply from their record highs in 2013, due to China's economic slowdown and global oversupply.
On Wednesday, the dairy giant lifted its forecast payout for its 10,500 farmer shareholders by 50 New Zealand cents for the current season. It marked the second lift since August. It now expects to pay farmers NZ$5.25 per kilo of milk solids in the current season versus a payout of NZ$3.90 per kilo of milk solids in the prior season.
