increase font size
Fonterra has lifted its 2018-19 milk forecast price.
Fonterra has delivered a mixed result to shareholders this morning.
The co-op has lifted its 2018-19 milk forecast price to $6.30-$6.60/kgMS, up from $6.00-$6.30 range announced in December.
However, the co-op revised its forecast earnings down to 15-25 cents per share, from 25-35c/share.
Chairman John Monaghan says the improved milk price forecast reflects the increases in global milk prices over the last quarter.
“Since our last milk price update in December, global demand has strengthened,” he says.
This is driven predominantly by stronger demand from Asia, including Greater China. The European Union’s (EU) intervention stocks of Skim Milk Powder (SMP) have also now cleared for the season and, as a result, Fonterra expects demand for SMP to be strong.
“Global supply remains above last season’s levels, but growth has slowed due to challenging weather conditions in some of the world’s largest milk producing regions – in particular, Australia’s milk production is forecast to be down 5-7% on last season and the EU’s growth has slowed and is now forecast to be less than 1% up on last year.
“Here in New Zealand, due to hot, dry weather since the start of the year, we’ve revised our Co-op’s forecast milk collections down from 1,550 million kgMS to 1,530 million kgMS. This is up 2% on last year.
“We’ve seen the positive impact of this supply-demand picture on a couple of fronts – the number of bidders and, more importantly, prices for the reference products that make up our milk price have increased over the last six GDT events.
“We expect demand to remain stronger relative to supply for the rest of the season.”
The DIRA milk price and the advance rate paid to farmers have been set off a milk price of $6.45 per kgMS.
Fonterra is also advising its farmers and unit holders that it will not be paying an interim dividend. A decision on any full year dividend can only be made at the end of the financial year, and will depend on the co-op’s full year earnings and balance sheet position.
Monaghan says that, while the milk price is strong, the co-op’s earnings performance is not satisfactory and the co-op needs to deliver farmers and unit holders a respectable return on their investment.
The Board is making solid progress with a full review of the strategy which includes a review of the dividend policy, he says.
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
An A$2 billion bid for Fonterra's Oceania business would be great news, according to Forsyth Barr senior analyst, equities, Matt Montgomerie.
The world's largest dairy company may be in pole position to acquire Fonterra's Australian assets.
Over 85% of Fonterra farmer suppliers will be eligible for customer funding up to $1,500 for solutions designed to drive on-farm efficiency gains and reduce emissions intensity.
Fresh produce grower and exporter T&G Global has overturned last year’s dismal performance by reporting a half year net profit of $1.7 million.
One of New Zealand’s largest fertiliser plants could be forced to shut down for four months as uncertainty looms over gas supply.
Federated Farmers North Canterbury president Bex Green says two public meetings held this week should have made it loud and clear that rural families and businesses are concerned about proposed staffing changes at NZ Police.
The Environmental Protection Authority (EPA) is consulting on a proposal to ban weedkillers containing chlorthal-dimethyl (DCPA).
August 6 marks Farm Worker Appreciation Day, a moment to recognise the dedication and hard mahi of dairy farm workers across Aotearoa - and DairyNZ is taking the opportunity to celebrate the skilled teams working on its two research farms.
OPINION: The Government has been seeking industry feedback on its proposed amendments to a range of Resource Management Act (RMA) national direction instruments.
OPINION: Sydney has a $12 million milk disposal problem.
OPINION: Canterbury milk processor Synlait's recovery seems to have hit another snag.
