(Adds CEO comment, dividend and debt details)
By Charlotte Greenfield
WELLINGTON, Sept 24 (Reuters) - New Zealand dairy processor Fonterra FCG.NZ increased its milk price payout forecast and reported a 183 percent rise in full-year profit on Thursday amid a modest recovery from this year's plummet in global dairy prices.
The world's largest dairy exporter said net profit after tax was NZ$506 million ($317.36 million) in the year to July 31, compared with NZ$179 million a year ago.
Slowing economic growth in New Zealand's top export market, China, and a global oversupply of milk products have seen dairy prices plummet after reaching record highs in 2013. However, prices have recovered somewhat in the second half of the financial year and were up 16.5 percent last week.
This allowed Fonterra to raise its forecast to NZ$4.60 per kilogram of milk solids from a previous forecast of NZ$3.85.
"Prices are often cyclical, but this year's market is one of the most difficult I've known," Fonterra CEO Theo Spierings said in a written statement.
"Looking ahead, this uncertainty means that world markets are likely to be difficult in the medium-term," Spierings said.
Lower dairy prices this year reduced Fonterra's costs and helped boost the cooperative's profit, but weighed heavily on the company's farmer-shareholders whose incomes have been slashed in the last year.
Fonterra raised its full-year dividend forecast to 40 to 50 NZ cents per share, compared with 25 to 35 NZ cents per share for the year just ended.
Fonterra's high debt levels continued to rise, after the company began offering around NZ$430 million in interest-free loans to its struggling farmers. The company's gearing rate increased to 49.7 percent from 42.3 percent in 2014, edging up towards the levels seen in 2008 when the company's balance sheets suffered during the global financial crisis and its gearing rate rose to almost 80 percent.
Fonterra is continuing the business review it started at the end of last year to reduce its costs. On Monday, Fonterra said it would cut 227 more jobs than previous flagged, taking the job losses to 750 or more than 4 percent of the company's 16,000 workers globally. ID:nL4N11Q0LQ
Shares in Fonterra's FCG.NZ fund, which provides investor exposure to the farmer-owned dairy exporter, climbed to their highest in five months on Wednesday and closed at $5.24. They have soared nearly 9 percent this month and if sustained, it would be the largest monthly increase in three years. ($1 = 1.5944 New Zealand dollars)