Tuesday 13th December 2011
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Fonterra Cooperative Group, New Zealand’s biggest company by sales, raised its forecast payout for 2012, citing a ‘modest’ recovery in international prices over the past two months.
The cooperative lifted its estimate for the Farmgate Milk Price by 20 cents to $6.50 per kilogram of milk solids and kept the distributable profit forecast in a range of 40 cents to 50 cents.
Average prices of dairy products rose to the highest level since July in Fonterra’s last online auction this month and have gained in three of the past four fortnightly sales.
Today’s upward revision comes after Fonterra lowered the forecast in October, citing a high kiwi dollar and weaker commodity prices.
“The new forecast reflected a modest recovery in global dairy commodity prices over the past two months,” chairman Henry van der Heyden said in a statement.
Fonterra reviews the Farmgate Milk Price every quarter as part of its obligations under the Dairy Industry Restructuring Act.
The company also reiterated the estimated fair value share price for the 2012/13 season at $4.52 a share, unchanged from the current season. Independent valuer Grant Samuel had assessed the restricted market value range mid-point at $4.26 and under transitional arrangements that means the actual base price remains where it was first set.
Ven der Heyden said the valuation had been hurt by adverse exchange rate movements since the last assessment in May.
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