Friday 5th July 2019
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Fonterra Cooperative Group chief financial officer Marc Rivers says there was nothing new behind yesterday's slump in both its farmer-owned shares the Shareholders' Fund units.
“While the share price does not impact the co-op’s balance sheet or our ability to operate and pay our bills, it does impact our farmers’ balance sheets,” he said in a statement to the NZX.
The farmer-owned shares yesterday dropped 6.4 percent to a record low $3.51 on a volume of 529,000, compared to their 90-day average of 163,000. They are now down 24.8 percent so far this year.
Fonterra Shareholders' Fund units fell 5.3 percent to $3.55 - their lowest close - on a volume of 416,000, more than twice their 197,000 average the past three months. The units are down 23.5 percent so far this year.
The shares and units have been battered after the dairy giant reported its first loss in the year to July 31, 2018 and announced a “full stock-take and portfolio review.”
A year ago, the units traded at $5.46. They hit an all-time high of $8.09 in May 2013, before a false botulism scare that prompted a recall of whey protein concentrate.
Over the past year, Fonterra has divested a range of assets no longer deemed central to the cooperative’s future, including the Tip Top ice-cream business, which sold for $380 million.
It is currently reviewing its two farm hubs in China, options for the future ownership of its Brazil joint venture with Nestle, and is closing its Dennington factory in Australia.
“Our performance is not where it needs to be. We’re doing everything we can to turn that performance around and are undergoing a full strategy review. We know there are going to be some bumps along the way,” Rivers said in today's statement.
In May, Fonterra lowered its earnings guidance to 10-15 cents per share from 15-25 cents on "heightened risks." That implies a forecast range of $161.2-$241.8 million, compared to the $241.8-$403 million it had previously forecast.
“Fonterra is committed to further strengthening our balance sheet and lifting our performance, and we believe this will be reflected in the value of the co-op over time,” Rivers said today.
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