Friday 4th December 2020
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Fonterra Co-operative Group Limited today narrowed its 2020/21 forecast Farmgate Milk Price range, reported a solid start to the 2021 financial year and reconfirmed its forecast earnings guidance.
Fonterra CEO Miles Hurrell says as a result of strong demand for New Zealand dairy, the Co-op has narrowed and lifted the bottom end of the forecast Farmgate Milk Price range from NZD $6.30 - $7.30 per kgMS to NZD $6.70 - $7.30 per kgMS.
“This means the midpoint of the range, which farmers are paid off, has increased to NZD $7.00 per kgMS.
“China is continuing to recover well from COVID-19 and this is reflected in recent Global Dairy Trade (GDT) auctions with strong demand from Chinese buyers, especially for Whole Milk Powder, which is a key driver of the milk price.
“Our forecasts would see the Co-op contribute around NZD $10.5 billion to the New Zealand economy this year.”
First quarter business update
Mr Hurrell says the Co-operative has continued to make progress on implementing its strategy and had a solid start to the first quarter, delivering total Group normalised Earnings Before Interest and Tax (EBIT) of NZD $250 million, up NZD $72 million on last year.
“Despite ongoing market disruptions from COVID-19, we are continuing to build on the momentum achieved in the last financial year and this can be seen in the progress we are making against our 2021 priorities:
• Our Co-operative, which is about supporting farmers and employees;
• Performance, which is about hitting our financial targets; and
• Community, which is about exceeding customer expectations, supporting communities through our nutrition programmes and making our low carbon farming model a powerful point of differentiation.
“These priorities are helping us take another step this year towards our goals of Healthy People, Healthy Environment and Healthy Business.” From a performance perspective, Mr Hurrell says he is pleased with the progress the Co-op has made in the first quarter.
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