Fonterra To Lean On Its Higher-Growth Markets To Support Near-Term Growth

Despite a poor earnings showing in its Australia and New Zealand business division, multinational dairy cooperative Fonterra recorded a strong 12.6% growth in its overall profit for the year ending July 2011. This resilience in overall profitability can be attributed to a successful hedging of its foreign exchange exposure and its ability to pass on the inflationary burden to its emerging market (EM) consumer base. Over the coming quarters, the underlying demand dynamics in high-growth markets such as Asia and Africa should continue to provide some cushion against the softer domestic demand conditions in Australia and New Zealand, in turn lending some upward support to Fonterra's performance.

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