Fonterra has posted a profit of $659 million as restructuring, improved sales and margins helped it recover from the previous year's massive loss.
The profit to the end of July compared with a $605m loss the year before, as the co-operative wrote down the value of assets and took other hits worth $805m.
Excluding the one-off items, Fonterra made a profit of $382m underlying profit. It will pay farmer-suppliers $7.14 per kilo of milk solids, with an added five cents a share dividend.
Fonterra chief executive Miles Hurrell said the result reflected strong milk prices as well as the drastic measures it had been forced to take last year.
"We increased our profit after tax by more than $1 billion, reduced our debt by more than $1 billion and this has put us in a position to start paying dividends again."
After last year's result Fonterra moved to sell overseas assets, shut underperforming local plants, cut debt, and reduced its costs.
It adopted a strategy of looking to extract more value from local milk production, and put less emphasis on overseas ventures, including its expansion in China.
Hurrell said Fonterra's ingredients business, which makes milk powders, had a strong lift in sales, and its China food service business had improved despite disruption and pressures because of COVID-19.
"There continues to be significant uncertainties - including how the global recession and new waves of COVID-19 will impact demand globally, and what will happen to the price relativities between the products that determine our milk price and the rest of our product range."
It has forecast a payout range of $5.90 to $6.90 a kilo for the current season.