Fonterra shaves 50c off forecast milk price
Fonterra has dropped its forecast milk price mid-point by 50c as a surge in global milk production is putting downward pressure on commodity prices.
The co-op has forecast earnings of 15-25c/share for this financial year, based on a forecast EBIT range of $700-800 million.
“While this is down on last year, our forecast EPS (earnings per share) is up, reflecting lower interest and tax. To get here, we can’t repeat last year’s disappointing performance.
“The fundamentals of dairy remain strong.”
He says the world wants more dairy, and a growing middle class with high disposable incomes is looking for premium products.
“We believe we can create value from innovation, sustainability and efficiency.
“And our new strategy positions us well to leverage this.”
But at the same time, Hurrell says, the global economy is showing signs of slowing, with increasing trade tensions.
“Given our reliance on the international market, these are factors we continue to watch closely.”
On 2019-20 milk collection, he says milk collection forecast is similar to last year.
Fonterra has revised its milk price to a range of $6.55 to $7.55/kgMS – the fourth consecutive year of milk prices over $6/kgMS.
