Fonterra has posted NZ$736m ($608m) in net earnings for the full-year 2013, an 18% increase compared with NZ$624m in 2012, despite a drought which resulted in lower milk production in Australia.
The co-operative cited strong demand in Asia, Africa and Middle East as a factor offsetting weakness in New Zealand and Australia.
Net sales declined 6% to NZ$18.6bn, earnings before interest and taxes (EBIT) dropped 3% to NZ$1bn.
Fonterra CEO Theo Spierings said that the company had made good progress with its strategy during the year, particularly in foodservice, everyday nutrition and advanced nutrition.
"The combined impact of the drought and the reshaping of Fonterra's Australian business, saw the Co-operative's normalised EBIT of $1 billion for the 2013 year fall 3 per cent short of last year."
"Although the New Zealand consumer business grew its earnings in a tough trading environment, Australia faced heightened competition for lower milk volumes, and continuing margin squeeze for consumer brands," Spierings added.
Earlier this year, Fonterra was under scrutiny for allegedly contaminating its products with botulism-causing bacteria, which triggered a recall and ban of the products in many countries worldwide.
