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 is also maintaining its forecast full-year underlying earnings guidance of 15-25 cents/share.
But the co-op has revised its forecast milk collections for the 2020 season: down from 1,530 million kgMS to 1,515 million kgMS due to poor weather conditions.
Fonterra chief executive Miles Hurrell says the co-op remains confident despite current market conditions as a result of coronavirus.
“The momentum we saw in the first three months of the financial year has continued, and as we approach the interim results our underlying earnings are tracking well. However, given the potential significant risks that could arise from coronavirus in the second half, we are taking a prudent approach and maintaining our full-year forecast earnings range.
“The current situation is very fluid and uncertain. However, we have already contracted a high percentage of our 2020 financial year’s milk supply and this is helping us manage the impact of coronavirus.
“Our Greater China team are working hard to keep our operations running as smoothly as possible. Without them this would not have been possible and I want to thank them for their efforts.
“There has been a slow-down in processing of containers at ports and we are managing the flow of our product into China carefully to avoid congestion. Currently, our product is continuing to be cleared by customs and quarantine officials.
“We will provide a further update on the impact of coronavirus on our business when we announce our interim result on 18 March.”
Commenting on the co-op’s milk collections forecast, Hurrell says they are due to be down because of the weather conditions across several parts of New Zealand.
“We have recently seen a reduction in milk collections and our farmers are facing ongoing challenging weather. We’ll continue to work with them to ensure that if they need extra support that they are able to access it.”
