Fonterra is sticking with its forecast payout of $4 a kilo of milk solids this year despite the impact of the strong kiwi dollar.
The dairy giant increased revenue by 5% to $6 billion over the six months to the end of November - but the currency means there is $200 million less available to farmers.
Fonterra's exchange rate hedging programme protected it from the full effect of the dollar's erosion of export returns, though the amount Fonterra will pay its 12,000 farmers is still down 8% to $2.2 billion.
The revenue included a one-off gain on the sale of part of Fonterra's Mainland business to New Zealand Dairy Foods.
Fonterra chief executive Andrew Ferrier says stable commodity prices mean it's not changing its forecast full-year payment to farmers of $4 a kilo.
Sales improved at its ingredients and brands businesses, but costs also rose on the back of higher freight charges and raw material costs.
Fonterra's brands business, which produces higher-value dairy products like ice cream and yoghurts, will focus on fewer, stronger brands to increase prices to recover higher input costs.
Ferrier says acquisitions will also help the company expand its presence internationally, where it competes against the likes of Nestle and Kraft Foods.
Fonterra generates around 20% of New Zealand's exports and 7% of
gross domestic product.
