Debt-Laden Fonterra Faces Uphill Battle Amid Weak Earnings

Fonterra went into the black in its first half but the co-op faces an uphill battle to meet its earnings forecasts for the year while it reduces debt and streamlines its operations. The dairy giant reported net profit of $80 million in six months to January, up from a loss of $348m a year earlier, but said its net earnings before interest and tax dropped by 29 per cent to $323m, The New Zealand Herald reported. Newly-appointed chief executive Miles Hurrell said the result was "not be where it should be". Earnings were down across all divisions and the company's already high debt lifted by 4 per cent to $7.4 billion. At that level, Fonterra's gearing came to 52.5 per cent compared with its target range of 40 to 45 per cent. The company said it was confident asset sales worth $800m could be achieved to return its debt level back within the desired band. A steady performance from New Zealand ingredients had been offset by challenges in Australia Ingredients, which saw Ingredients EBIT decline by 17 per cent to $461m. Read more