Fonterra Advises on 'Headwinds' and Prices25 September 2013
NEW ZEALAND – Fonterra has advised its suppliers that despite the hike in farmgate price and bullish dairy outlook, the company also faces ‘headwinds.’
The Cooperative’s forecast farmgate milk price of $8.30 per kg milk solids represents a 50 cent jump, not including an estimate share dividend of 32 cents.
Fonterra says that this is prompted by strong Whole Milk Powder prices, driven by demand from the Chinese markets.
However, John Wilson, Fonterra Chairman said the company still faces ‘high levels of volatility’ around the world.
This is forecast to be reflected in business earnings next year which are expected to be lower than the strong performance of 2013.
Chief Executive Theo Spierings said: “The higher cost of goods will make it more difficult to drive earnings growth in our consumer and foodservice businesses in the first half of this financial year.
“We also expect to see a negative impact on our product mix returns during the first half of the current year as milk powder prices significantly outpace the relative prices of cheese and casein.”
Mr Spierings reassured that the estimated dividend of 32 cents would be covered by drawing on the balance sheet and cash flow performance and that, looking ahead, Fonterra remains positive.
TheCattleSite News Desk