The country’s largest milk processor expects earnings in the year ended July 31 will be “towards the top end” of its previously published guidance of 25-35 cents per share, it said in a statement to the NZX on Friday. It will release its full-year results on September 22.
“While we are still in the process of finalising and auditing our FY22 numbers, we now have enough certainty overall to provide an update ahead of our annual results announcement in September,” said chief executive Miles Hurrell.
“Our co-op has made good progress against our strategy over the past 12 months, and we look forward to updating our stakeholders when we release our results in September,” he said.
“Looking ahead, we see a positive outlook for dairy. We continue to see favourable supply and demand dynamics and remain well-positioned to keep delivering against our strategy.”
However after hitting a record in March, dairy prices have weakened in recent global auctions as disruption from Covid-19 lockdowns in China, an economic crisis in Sri Lanka and the Russia-Ukraine conflict weigh on demand and buyers baulk at higher prices in an environment of high inflation and constrained consumer spending.
Still, most analysts remain positive about the outlook due to the longer term demand and supply dynamics.
Units in the Fonterra Shareholders’ Fund, which gives outside investors access to the co-operative’s dividends, rose 2% to $3.03 when the market opened at 10am.
High milk payments to farmers and global disruptions have impacted Fonterra’s recent profitability, with the co-operative reporting a 22% drop in profit to $472 million for the nine months to the end of April.
Dairy is New Zealand’s biggest export earner, and the value of milk powder, butter and cheese exports rose 7.1% to $1.7 billion in the year to June 30, according to the latest Stats NZ data.
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