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- Release Date: 28/08/12 14:30
- Summary: FORECAST: FCG: FONTERRA REVISES 2013 PAYOUT FORECAST
- Price Sensitive: No
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FCG
28/08/2012 12:30
FORECAST
REL: 1230 HRS Fonterra Co-operative Group Limited
FORECAST: FCG: FONTERRA REVISES 2013 PAYOUT FORECAST
Fonterra has announced a revised payout forecast range for the 2012/13 season
of $5.65 - $5.75 before retentions for a fully shared up farmer, 30 cents
down on the previous forecast range.
The revised forecast comprises a lower Fonterra Farmgate Milk Price of $5.25
per kilogram of milksolids, down from $5.50 and a lower forecast net profit
after tax range of 40-50 cents, down from 45-55 cents per share.
Fonterra is required to consider its Farmgate Milk Price every quarter as a
condition of the Dairy Industry Restructuring Act (DIRA).
Fonterra Chairman Sir Henry van der Heyden said most of the downward pressure
on the Farmgate Milk Price forecast was due to the continuing strength of the
New Zealand dollar.
"We've actually seen improving prices in recent GlobalDairyTrade (GDT)
trading events, but the strength of the Kiwi dollar is eroding any gains,"
said Sir Henry.
Overall, the GDT trade weighted index was up 4.1% over the past four events,
underpinned by a 7.8% rise on August 15. However, prices are low compared to
a year ago and the New Zealand dollar remains strong against the US dollar.
Chief Executive Theo Spierings said Fonterra's consumer businesses were under
pressure due to unfavourable foreign exchange translation effects in many
markets, and a difficult retail environment affecting the Australia-New
Zealand business: "Accordingly, we have lowered our forecast net profit
after tax range to 40-50 cents a share."
Mr Spierings said the Board had decided to maintain current advance rate
payments to farmers. This would mean no change to farmers' cash flows.
Mr Spierings said there appeared to be some early signs of strengthening
dairy prices, partially driven by global weather events.
"A serious drought in the United States is pushing up the price of grain,
which seems to be affecting dairy production and tightening supply. Weather
conditions in Europe, with extreme wetness in the northern regions of the
continent and a heat wave in the south, are also impacting grain production.
The Indian summer monsoon is also off to a slow start, with rainfall about 20
per cent below normal," Mr Spierings said.
These factors were contributing to some of the firming in global dairy
prices, however, Mr Spierings said any gains would continue to be impacted by
the strong New Zealand dollar.
"Our forecasting anticipates some recovery in global dairy prices but we
don't know how strong this recovery will be or when it will kick in. For
this reason, our farmer shareholders should continue to plan cautiously."
End CA:00226539 For:FCG Type:FORECAST Time:2012-08-28 12:30:33
