FSF
08/03/2016 08:30
FORECAST
PRICE SENSITIVE
REL: 0830 HRS Fonterra Shareholders' Fund (NS)
FORECAST: FSF: Fonterra revises 2015/16 forecast Milk Price
8 March 2016
FONTERRA REVISES 2015/16 FORECAST MILK PRICE
Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk
Price for the 2015/16 season from $4.15 per kgMS to $3.90 per kgMS.
When combined with the forecast earnings per share range of 45-55 cents, this
means a total forecast available for payout of $4.35-$4.45 per kgMS and would
currently equate to a forecast Cash Payout of $4.25-$4.30 per kgMS for a
fully shared-up farmer after retentions.
Fonterra is forecasting its New Zealand milk production to be at least 4 per
cent lower than last season as New Zealand farmers respond to the ongoing low
prices by reducing herd size and feeding significantly less supplementary
feed which is expected to have an impact on this Autumn's production.
Chairman John Wilson said difficult conditions in the globally traded dairy
market have put further pressure on the forecast.
"This further reduction in the forecast Farmgate Milk Price is the last thing
farmers want to hear in what is proving to be a very challenging season. At
times like this the business needs to do everything it can to drive every
last cent back to farmers.
"Management is fully focused on reducing cost and generating cash right
across the business. The continuing lift in financial performance and our
balance sheet strength will provide opportunities to support our farmers'
cash flows. We will provide an update on this at our interim results on March
23," said Mr Wilson.
Chief Executive Theo Spierings said dairy exports and imports had been
imbalanced for the past 18 months due to European production increasing more
than expected, and lower imports into China and Russia - the two largest
importers of dairy.
"The time frame for a rebalancing has moved out and largely depends on
production reducing - particularly in Europe - in response to these
unsustainably low global dairy prices.
"The long-term fundamentals for dairy are positive with demand increasing at
over 2 per cent a year due to the growing world population, increasing middle
classes in Asia, urbanisation and favourable demographics.
"Our forecast is based on no significant changes to either supply or demand
globally before the end of the year. However, a reduction in the supply
available for export before then could mean prices recover earlier than
currently expected," said Mr Spierings.
Note: currency is New Zealand dollars unless otherwise stated.
- ENDS -
For further information contact:
Connie Buchanan
Fonterra Communications
Phone: +64 22 698 5602
24-hour media line
Phone: +64 21 507 072
End CA:00278918 For:FSF Type:FORECAST Time:2016-03-08 08:30:33
