LIC forecast earnings takes a hit

LIC says its underlying earnings for 2023-24 financial year will be in the range of $17-$22 million. In July, the co-operative expected underlying earnings to be in the range of $22-28.

LIC is also leaving open the possibility of another revision if milk prices continue to fall.

It says the revised guidance assumes “no further milk price changes or significant climate events take place”.

In the past two weeks, Fonterra has slashed $1.25 from its forecast farmgate milk price range mid-point.

Farmers now expect to be paid $6.75/kgMS for milk this season.

LIC board chair Murray King says earnings were anticipated to be lower than initially forecasted, however the co-op remains committed to ensuring farmers can continue their investment to breeding the most efficient cows for their herd.

“Although it is early into the season, the lower forecast milk payout has created a challenging economic landscape for many dairy farmers across New Zealand.

“Our farmers will be reviewing their cost structures and as their co-operative we are doing the same.

“The board is committed to protecting the long-term sustainability of the co-op and the efficiency of our farmers’ herds, while ensuring that we continue to deliver exceptional value on farm.”

LIC says it will continue to update the market in line with its continuous disclosure obligations.