Fonterra’s Australian business reported improved earnings and improved its market share. EBIT lifted 43% to NZ$106m as revenue rose 7% and gross profit lifted 16% to NZ$283m due to higher product prices in Fonterra’s ingredients channel and a weaker Australian dollar, partially offset by higher input costs impacting gross margins in Consumer and Foodservice channels. Ongoing labour shortages and on-farm input costs and availability kept milk intake flat at 106m kgms which affected sales volumes that fell 2% to 365mt.

Meanwhile, following a review of several options, Fonterra has decided to keep its Australian operations. Among the options was a potential public float of the business or a partial stake sale with analysts suggesting the IPO could have been worth between $1bn – $1.3bn. Chief executive officer Miles Hurrell said the business is performing well and will play a key role in Fonterra achieving its 2030 target. Fonterra Australia includes consumer brands Western Star butter, Perfect Italiano and Mainland cheese along with a licencing arrangement for the Bega brand on natural and processed cheddar cheese, string cheese and butter products sold in Australia.