Why the Fonterra (ASX:FSF) share price is moving higher

The Fonterra share price is rising today. We take a look at the dairy co-operative's latest results and guidance.

| More on:

Should you invest $1,000 in Shaver Shop Group right now?

Before you buy Shaver Shop Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Shaver Shop Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

fish eye view of dairy cows in paddock

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Fonterra Shareholders' Fund (ASX: FSF) share price is rising today, up 2% to $3.56 per share.

We take a look at the dairy co-operative's updated forecast for the farmgate milk price and its Q3 performance for the nine months ending 30 April.

What results did Fonterra report?

Fonterra's share price is moving higher after the co-op reported a 61% increase in normalised net profit after tax (NPAT) from the previous corresponding period. Normalised NPAT came in at $587 million. Fonterra credited its stronger balance sheet and improving underlying business performance for the boost.

Reported NPAT was $603 million, up 2% year on year.

Fonterra also reported an 18% year-on-year increase in its total group normalised earnings before interest and tax (normalised EBIT) of $959 million. It said lower operating expenses and higher margins helped drive the higher earnings.

Commenting on the results, Fonterra's CEO Miles Hurrell said:

Greater China continues to be an important performer for us, delivering year-to-date normalised EBIT of $457 million, up 30% or $106 million year-on-year. Foodservice, once again, was the big driver behind this result, contributing $93 million of the growth. In the third quarter, the team continued to improve the strong gross margins we saw in Foodservice at half year by shifting milk into higher value products, for example cream cheese. As a result, the year-to-date margin increased from 21.5% to 28.6%.

Regarding the balance sheet, Hurrell added:

Fonterra's operating expenses are down 5% year-to-date but we are planning some additional expenditure in the final quarter to support our brands and product initiatives for next year. Our debt reduction over the last couple of years and lower interest rates have reduced our interest bill by $69 million for the nine months ending 30 April 2021.

Looking ahead Fonterra maintained its normalised earnings guidance of 25 to 35 cents per share. The co-op noted that normalised earnings per share is currently sitting at 34 cents, but it expects the full-year results will fall in the middle of its guidance range as earnings come under some pressure during the fourth quarter.

Farmgate milk price update

Fonterra also revealed its opening forecast farmgate milk price range for the 2021–22 season. It forecasts a price of NZ$7.25–8.75 per kilogram of milk solids (kgMS), with a midpoint of NZ$8.00 per kgMS.

"Based on… supply and demand dynamics, along with where the NZ dollar is sitting relative to the US dollar, we're expecting whole milk prices to remain at current levels for the near future," Hurrell said.

Fonterra share price snapshot

Fonterra's shares have lagged the wider All Ordinaries Index (ASX: XAO) over the past year, up 5.3% compared to a 24.5% gain on the All Ords.

Year-to-date the Fonterra share price is down 15.2%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Excited couple celebrating success while looking at smartphone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in May

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Opinions

Investing in high-yield ASX stocks has two major negatives

High-yield stocks do have downsides.

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »

Woman looking at a phone with stock market bars in the background.
Share Market News

Market outlook: Should I 'sell in May and go away'?

May is the time to sell... If you believe in fairytales.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »