Fonterra's shooting for a slightly increased milk price for its farmers in the new season that starts on June 1 and reports that there's been a 'high volume of interest' in its plan to sell its consumer and associated businesses including brands such as Anchor and Mainland.
In a third-quarter business update released on Wednesday, Fonterra announced profit after tax from continuing operations of $1.013 billion for the first nine months of the financial year, up $20 million on the same time a year ago. The earnings in the latest period are equivalent to 61c per share.
As a result of this performance, the co-operative's chief executive Miles Hurrell says it has lifted the forecast continuing operations’ earnings range for the full year to 60-70 cents per share, up from 50-65 cents per share.
Fonterra announced an opening 2024/25 season forecast Farmgate Milk Price of $7.25-8.75 per kilogram of milk solids - giving a 'midpoint' of $8.00 per kgMS. That's slightly higher than the forecast for the current season that's about to end.
"Our current season forecast Farmgate Milk Price midpoint remains unchanged at $7.80 per kgMS and as we are nearing the end of the season, we have narrowed the range to $7.70-$7.90 per kgMS," Hurrell said.
"Looking to the 2024/25 season, milk supply and demand dynamics remain finely balanced and China import volumes have not yet recovered to historic levels.
"Given the early point in the season, the uncertainty in the outlook and ongoing risk of volatility in global markets, we are starting the season with a cautious approach."
Hurrell said Fonterra had received a high volume of interest from parties looking to be involved in the potential divestment of our Consumer and associated businesses. Fonterra's indicated a sale may take 12-18 months.
"It’s still early days in this process, and we commit to providing farmer shareholders, unit holders, our people and the market updated on new developments as they occur," Hurrell said.
"We are also progressing work on our updated strategy and expect to share further detail over the coming months."
This is the dairy industry payout history.
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2 Comments
The biggest immediate improvement is Fonterra releasing more cash in July than planned even if at the cost of reducing our final September payment. Going to significantly reduce my peak overdraft this year.
I would rather Fonterra estimate "conservatively" at the start of the season than repeat last year's roller coaster of a ride. Any reduction in volatility would be greatly appreciated.
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