Fonterra recorded net profit after tax of NZD 80 million ($54.7 million) in the six months to 31 January, following its first ever annual loss last year.

Revenue dropped 1% to NZD 9.7 billion ($6.63 billion), as the company’s Australia ingredients business was impacted by drought, leading to a decline in milk collections in the country.

Fonterra is currently carrying out a major financial review, which was implemented after the firm posted a NZD 196 million ($128.5 million) loss for the 2018 financial year.

The company today announced it aims to sell its 50% stake in DFE Pharma, a joint venture established in 2006 between Fonterra and FrieslandCampina, which supplies pharmaceutical excipients.

It has also offloaded its interest in its Venezuelan consumer joint venture Corporacíon Inlaca to international food business Mirona.

Meanwhile, the firm said it has received “strong interest” in Tip Top ice cream brand, which it announced it would consider selling last year, and is “actively considering its options” for its shareholding in Beingmate.

Fonterra chief executive Miles Hurrell.

Miles Hurrell, who was permanently appointed as Fonterra’s CEO earlier this month after serving as interim chief executive since last August, said the company is “well on track” to reduce debt by the end of the year by NZD 800 million ($546.8 million).

“The steady performance from New Zealand ingredients in the first half of FY19 has been offset by challenges in Australia ingredients and this has seen our total ingredients EBIT decline by 17% to NDZ 461 million ($315 million),” he said.

“Our Australia ingredients business continues to feel the impact of the drought. We can see it in the decline of Australian milk collections and aggressive price competition for milk, which is resulting in the underutilisation of manufacturing assets and tightening margins.”

He added: “Our three-point plan involves taking stock of our business and conducting a portfolio review, getting the basics right and improving our forecasting. We’ve made good progress so far and we will continue to take these steps in the second half to firm up our foundations and strengthen our balance sheet.

“The second half will also see us continuing the work on developing a new strategy to support a much-needed change in direction. We are doing the right things but it’s clear more is needed to lift our performance. We need to simplify and improve the co-op so we can grow value.”