Sharechat Logo

Fonterra cuts 2012 payout forecast

Monday 12th March 2012

Text too small?

Fonterra Cooperative Group cut its forecast payout for the 2011/12 season, citing the rising New Zealand dollar, declining global prices of commodities and increased production from Northern Hemisphere rivals.

The world’s biggest exporter of dairy products lowered its farmgate milk price by 15 cents to $6.35 a kilogram, while keeping its so-called distributable profit in a range of 40 cents to 50 cents a share, it said in a statement today. That lowered the total forecast payout to a range of $6.75 to $6.85.

The revised forecast follows a run of weaker prices in the Auckland-based company’s fortnightly GlobalDairyTrade auctions, which amounts to a 5.7 percent drop in its benchmark GDT-Trade Weighted Index of 5.7 percent since Dec. 13, when Fonterra last gave an estimate for the payout.

“We think dairy commodity prices are likely to remain under some pressure through to mid-2012,” said chief executive Theo Spierings. “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.”

The New Zealand dollar fell to 81.79 US cents from 82.01 cents immediately before the announcement.

The impact of increased global milk production is partly mitigated by the level of international demand for milk powder, he said.

Among factors weighing on global commodity prices are the fallout from Greece’s debt crisis, increased tensions in the Middle East and China’s move last week to cut its economic growth target to 7.5 percent from 8 percent, he said.

Prices of dairy products fell for the third straight sale on the GlobalDairyTrade platform last week, a sale that immediately followed China’s gross domestic product target revision.

The GDT-TWI Price Index fell 0.9 percent compared to the last sale two weeks earlier. The average winning price declined to US$3,576 a metric tonne. The price of whole milk powder fell 0.3 percent to US$3,409.

The Thomson Reuters/Jefferies CRB Commodity Index was last at 317.61 and has fallen 9.4 percent in the past 12 months.

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar sags after avalanche of data and central bank action
Fonterra board starts planning chair succession
Fulton Hogan keeps Australian civil construction unit
Time for congestion pricing has come - NZIER
Colliers defends KiwiBuild as 'far from a colossal failure'
Pushpay shares rise as cost-cutting upgrades earnings guidance
20th September 2019 Morning Report
NZ dollar weaker against British pound on EC president's Brexit optimism
Todd plans Kapuni drilling campaign
MARKET CLOSE: NZ shares gain; appetite for KFC helps Restaurant Brands hit record

IRG See IRG research reports