New Zealand eyes have been so focussed this week on an event 20,000kms distant that they might not have noticed here at home another extraordinary event, taking place on the NZX.
The market capitalisation of a company which listed as recently as 2012 on the local sharemarket soared past the $12bn mark and is hard on the heels of Meridian Energy, which has the highest valuation of NZ-based companies on the NZX at $12.3bn.
The challenger is a2 Milk, which sells a specialised type of milk with what it claims are health benefits.
A2 has had a chequered history but its market valuation keeps climbing, racing ahead of blue chips like Auckland International Airport and Fisher & Paykel Healthcare and leaving in its dust some one-time market darlings like Fletcher Buildings (market cap $4.3bn) and Spark ($7.2bn). Continue reading “Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star”
Encouraging signs emerged this week that key elements in the structure of NZ’s largest export industry are whipping themselves back into the shape they should be.
The giant co-op Fonterra has gone back into the black with a net profit of $80 million in the first half, after previously recording a net loss of $186m.
Meanwhile Westland Milk Products, NZ’s second biggest dairy co-op, is in line to be sold to China’s biggest dairy company, Yili, in a $588m transaction that would inject nearly half a million dollars into the operations of each of its suppliers.
Alongside these co-ops, the Canterbury-based Synlait has underlined its strength in the industry with a solid result in its half-year after achieving higher sales volumes. It reported a half-year net profit of $37.3m, 9.6% lower than the $41.3m in the previous first half, but with the focus on investing for growth, with a second processing plant due to come on stream for the 2019-20 season. Continue reading “Comforting news for dairy farmers as companies report results and the world price rises again”
It’s a critical week for the country’s largest company, Fonterra, which has to find a new direction after shipping out its chief executive, Theo Spierings, writing off more than $1.5bn from its balance sheet, and posting its first loss in its 17-year history.
Meanwhile, back on the farm, Fonterra’s suppliers are absorbing payout downgrades as well as a slump in dairy farm prices. At the same time they are seeing the valuations of other companies in the dairy industry—notably A2 Milk and Synlait— soaring on the NZ sharemarket.
So they’ll be looking to Fonterra’s leaders for some fresh ideas on how to turnaround the fortunes of the big co-op. Continue reading “Why Fonterra’s farmers should be wondering what the Irish can teach us”
It must have felt like salt being rubbed into their financial wounds for Fonterra’s farmer-shareholders, when Synlait Milk this week reported its net profit soared 89% to $74.6m. Fonterra’s mob saw their co-op notch up a loss of $196m, and with prices at GDT auctions trending down, they may also have to accept a trim to the forecast milk price.
Where Fonterra talks of slimming its portfolio, Synlait is still investing in expansion.
In the latest year Synlait has been working on new and expanded plants in Dunsandel, Auckland and Pokeno as well as a research and development centre in Palmerston North. Continue reading “The grass on the far side of the fence will look much greener for Fonterra farmers”
“We’ve kinda got to what they might call ‘peak cow’” . That’s how Primary Industries Minister Damien O’Connor put it, when Corin Dann interviewed him on Q&A. He went on:
“We’re giving clear signals that if growth is going to continue it will be growth and value from what they do, not just getting more from the land, with the environmental impacts of that”.
To some people, the phrase ‘peak cow’ sounds like it comes from the lexicology of the Green Party, which for long enough cried wolf about ‘peak oil’, only for oil producers to keep the stuff coming out of the ground in ever-increasing volumes. Continue reading “If we must come down from Peak Cow, let’s be careful about the regulatory path we take”