Monday, 12 March 2012 09:36

Fonterra payout drops

Written by 

Fonterra is reducing its 2011-12 forecast payout by 15c/kgMS as a result of declining commodity prices and a soaring Kiwi dollar.

The revised forecast comprises a farmgate milk price of $6.35/kgMS, down from $6.50/kgMS. The season's distributable profit range forecast of $570 million – $720m, equating to 40-50ckgMS/share remains unchanged.

Fonterra chairman Henry van der Heyden notes price declines in the five out of the last six Global Dairy Trade (GDT) trading events.

Overall, the GDT-Trade Weighted Index is down 5.7% since December 13 2011 when the forecast of $6.50/kgMS was announced.

He says the New Zealand dollar's continuing strength, higher levels of global milk production, and uncertainties in international markets led to the board decision to lower the Fonterra farmgate milk price forecast.

Fonterra chief executive Theo Spierings says the trends are indicating for stronger global production continuing into 2012.

"While we have had a strong start to the season in New Zealand, with record milk flows, we are also seeing higher milk production levels in the US and Europe.

"International milk powder demand, however, currently appears robust which should help offset the impact of the stronger milk supply growth.

"In the past few weeks, global markets seem to be reacting to the ongoing economic difficulties in Greece, the potential for conflict in the Middle East and China's reduced growth forecast. These events appear to be having a negative influence on most commodity prices.

"We think dairy commodity prices are likely to remain under some pressure through to mid-2012," says Spierings.

Fonterra will announce its interim results and dividend on March 29.

More like this

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

Editorial: A new era for two co-ops

OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.

Should co-op sell its consumer brands?

OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.

Featured

'One more push' to eliminate FE

Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

National

Machinery & Products

» Latest Print Issues Online

The Hound

Quid prod quo?

OPINION: Ageing lefty Chris Trotter reckons that the decision to delay recognition of Palestinian statehood is more than just a fit…

Deadwood

OPINION: A mate of yours truly recently met someone at a BBQ who works at a big consulting firm who spent…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter