Update: Fonterra has returned to profitability with a net profit after tax of $80 million.

That's up 123 percent on the previous year.

Chief executive Miles Hurrell says while the result is positive, earnings aren't as high as they should be.

Earnings before interest and tax fell 29 percent on the previous year.

 

Dairy giant Fonterra will release its half-year result today and is expected to update the market on an asset divestment programme designed to reduce debt by $800 million.

Fonterra has previously confirmed its ice cream business Tip Top is up for sale and bids for that business were due in last week.

ASB rural economist Nathan Penny told Mike Hosking Fonterra will outline plans to sell assets and cut debt.

"They are looking to reduce their debt quite dramatically. The main thing will be to make material progress throughout the year, but it is early days. It's a story we will be looking at for the next couple of years."

In other dairy news, Westland Milk Products' 400 shareholder farmers are reluctant to commit to a $588 million offer from Chinese company Yili Industrial Group.

Penny says it's for the farmers to decide if the deal goes through, but believes the proposal has plenty of benefits.

"It does appear to be a competitive offer which is on the table, we will just have to wait and see. The deal does guarantee a supply line for farmers, with China being a massive market."