Fonterra Co-operative Group (NZSE:FCG) Operating Income : NZ$2,003 Mil (TTM As of Jul. 2023)

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What is Fonterra Co-operative Group Operating Income?

Fonterra Co-operative Group's Operating Income for the six months ended in Jul. 2023 was NZ$1,147 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jul. 2023 was NZ$2,003 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Fonterra Co-operative Group's Operating Income for the six months ended in Jul. 2023 was NZ$1,147 Mil. Fonterra Co-operative Group's Revenue for the six months ended in Jul. 2023 was NZ$12,247 Mil. Therefore, Fonterra Co-operative Group's Operating Margin % for the quarter that ended in Jul. 2023 was 9.37%.

Good Sign:

Fonterra Co-operative Group Ltd operating margin is expanding. Margin expansion is usually a good sign.

Fonterra Co-operative Group's 5-Year average Growth Rate for Operating Margin % was 10.80% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Fonterra Co-operative Group's annualized ROC % for the quarter that ended in Jul. 2023 was 14.83%. Fonterra Co-operative Group's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jul. 2023 was 20.84%.

Fonterra Co-operative Group Operating Income Historical Data

The historical data trend for Fonterra Co-operative Group's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Fonterra Co-operative Group Operating Income Chart

Fonterra Co-operative Group Annual Data

Trend

Jul14

Jul15

Jul16

Jul17

Jul18

Jul19

Jul20

Jul21

Jul22

Jul23

Operating Income

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805.00

879.00

882.00

990.00

2,003.00

Fonterra Co-operative Group Semi-Annual Data
	Jan14	Jul14	Jan15	Jul15	Jan16	Jul16	Jan17	Jul17	Jan18	Jul18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23
Operating Income	Get a 7-Day Free Trial															283.00	537.00	453.00	856.00	1,147.00

Fonterra Co-operative Group Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jul. 2023 adds up the semi-annually data reported by the company within the most recent 12 months, which was NZ$2,003 Mil.

Fonterra Co-operative Group (NZSE:FCG) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Fonterra Co-operative Group's annualized ROC % for the quarter that ended in Jul. 2023 is calculated as:

	ROC % (Q: Jul. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jan. 2023 )	+	Invested Capital (Q: Jul. 2023 ))	/ count )
=	2294 * ( 1 - 13.09% )	/	( (15064	+	11831)	/ 2 )
=	1993.7154	/	13447.5
=	14.83 %

where

	Invested Capital		(Q: Jan. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	21391	-	6008	-	( 319	-	max(0, 9815	-	12146	+	319	))
=	15064

	Invested Capital		(Q: Jul. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	18601	-	4948	-	( 1822	-	max(0, 7261	-	9495	+	1822	))
=	11831

Note: The Operating Income data used here is two times the semi-annual (Jul. 2023) data.

2. Joel Greenblatt's definition of Return on Capital:

Fonterra Co-operative Group's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jul. 2023 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jul. 2023 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Jan. 2023		Q: Jul. 2023
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	1848	/	( ( (6262 + max(4132, 0))	+	(6343 + max(999, 0)) )	/	2 )
=	1848	/	( ( 10394	+	7342 )	/	2 )
=	1848	/	8868
=	20.84 %

where Working Capital is:

	Working Capital		(Q: Jan. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(2870	+	6844	+	2113)	-	(6008	+	0	+	1687)
=	4132

	Working Capital		(Q: Jul. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(2071	+	4346	+	956)	-	(4948	+	0	+	1426)
=	999

When net working capital is negative, 0 is used.

Note: The EBIT data used here is two times the semi-annual (Jul. 2023) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Fonterra Co-operative Group's Operating Margin % for the quarter that ended in Jul. 2023 is calculated as:

Operating Margin %	=	Operating Income (Q: Jul. 2023 )	/	Revenue (Q: Jul. 2023 )
	=	1147	/	12247
	=	9.37 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Fonterra Co-operative Group Operating Income Related Terms

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Fonterra Co-operative Group (NZSE:FCG) Business Description

Industry

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Traded in Other Exchanges

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Address

109 Fanshawe Street, Auckland Central, Auckland, NZL, 1010

Website

https://www.fonterra.com

Fonterra Co-operative Group Ltd operates predominantly in the international dairy industry. The company is involved in the collection, manufacture, and sale of milk and milk-derived products through its ingredients, Consumer and Foodservice channels. The company's reportable segments are Global Markets, Greater China, and Core Operations and the majority of the revenue is generated from its core operations segment. Its primary geographic markets are China, the Rest of Asia, Australia, New Zealand, the United States, Latin America, and the Rest of the world.