Cow bells will be ringing as dairy giant Fonterra gets on a financial roll

Dairy giant Fonterra is on a financial roll and it wants  to send  a  new wave of confidence through the country’s cowsheds.  It  upgraded its earnings guidance to 50 – 70c per share from 45 – 60c per share.  Contrast that  with the 20c it paid for the 2021-22 season.

At the same time, it  lowered and narrowed its forecast Farmgate Milk Price range of $8.50 – $10.00kg/MS to $8.50 – $9.50kg/MS, with a midpoint of $9.00 while holding its advance rate. It also reported a strong start to the 2023 financial year.

Fonterra CEO Miles Hurrell said it was a positive start to the year given the current global operating environment.

“We continue to feel the impact of geopolitical and macroeconomic events, with higher costs at every point in our supply chain. It’s a similar story behind the farm gate with our farmer shareholders managing significantly higher input costs”.

Fonterra reports a $585m net profit- and $13.7bn in payments to farmers from the milk price will flow into the economy

New Zealand’s  big dairy  co-op Fonterra, reporting  its  annual  result  with  revenue  rising 11%  to  $23.4bn  says  it  has  an “exciting  future”.

Net profit  of  $585m took a $80m hit from its Sri Lankan business following economic disruption in the nation.

But chief executive Miles  Hurrell says the co-op is making tangible progress on  its strategy  to focus on New Zealand milk, be a leader in sustainability and a leader in dairy innovation and science.

Hurrell reckons  the result  shows  decisions relating to product mix, market diversification, quality products and resilient supply chain are enabling the co-op to deliver both a strong milk price and robust financial performance in a tough global operating environment.

He  says the co-op is paying a total dividend of 20c per share for its farmer owners and unit holders. And this year’s higher Farmgate Milk Price is the strongest it has ever been, “which is great news for our farmers”.

The New Zealand economy benefits from this, with $13.7bn flowing through from milk price payments alone this year.

Fonterra lifts milk payout forecast to record level – but farmers will be soured if govt demands their herds be culled

Dairy  giant Fonterra has lifted its 2021/22 forecast farmgate milk price range to $9.30 – $9.90kg/MS, up from its previous forecast of $8.90 – $9.50.

This increases the midpoint of the range, at which farmers are paid, by 40c to $9.60 – easily the highest on record.

At that level, Fonterra estimates that the milk price  payout will contribute $14bn this season to the NZ economy.

Truly  exciting times for the dairy industry and  rural regions.  They  have  become  even more  important, as a  key prop to the economy  through the Covid pandemic, because of the  loss of  earnings from the international tourism  and  hospitality industries.

Fonterra is  performing  brilliantly under CEO Miles Hurrell, not  just in boosting  the co-op’s achievement of  a  record  payout, but  in turning  its  own finances  around after problems left by  the previous  administration.  Moreover it is exploiting technical  advances –  in  the  tanker fleet, for example, the first e-tanker  has  hit the road.