Fonterra delays results
Dairy giant Fonterra has postponed the release of its annual financial results to ‘‘no later than 30 September’’, from September 12 originally.
Early last month, Fonterra said it expected to make a loss for the 2019 financial year of between $590 million and $675m due to asset writedowns of up to $860m. The cooperative noted that the numbers could change.
Yesterday, Fonterra said it needed more time to complete the audited financial statements.
‘‘Fonterra and the co-operative’s auditor, PWC, are working constructively through the normal financial year-end accounts and auditing process.
‘‘However, due to the significant accounting adjustments in FY19, as set out in the announcement on 12 August, 2019, more time is required to complete the audited financial statements.
‘‘Fonterra confirms its previous announcement that it expects a reported loss of $590m-$675m for FY19, which is a 37 to 42 cent loss per share.
‘‘All numbers are subject to the board reviewing the full financial statements and to audit adjustments, and reflect the values attributable to equity holders.’’
The co-op said last month that it wouldl not pay a dividend for the 2019 financial year, for the first time in its 17-year history.
Hamilton Hindin Greene investment adviser Jeremy Sullivan said the delay effectively signalled that Fonterra was not 100 per cent sure the previous write-downs were accurate.
‘‘The fact that they’ve kicked it out at all means they aren’t certain on the value of those businesses, and they will be reviewing them before the directors sign off on them, and they need to make sure they’ve dotted and crossed everything that they should,’’ Sullivan said.
Foundation Fonterra shareholder Russ Rimmington said dairy prices were strong worldwide, and the company had got the message loud and clear that it should stick to the core business of processing milk.
‘‘I think they’re looking at the value-add division and seeing what else they can flog off to steady the ship. That’s all they can do now. I don’t think it’s cause for concern. They’re paying their bills and the [normal milk price] will be in the area of the third-highest, ever,’’ Rimmington said.
Dairy analyst Peter Fraser said the delay wasn’t a good sign but wasn’t surprising given comments from ANZ agricultural economist Susan Kilsby that Fonterra may have to make further write-downs on $700m of assets.
‘‘I think [Kilsby] is spot on,’’ Fraser said. In particular, Fonterra’s assets in Australia, Chile, and China would probably see further impairments.
PWC had been Fonterra’s auditors for 18 years, which was not best practice he said. He also speculated whether there would be another term with zero dividends paid out to unit holders.
The change in reporting date was not related to ‘‘any discussions with the Financial Markets Authority, recent speculation about further material asset impairments, or other announcements’’, Fonterra said.
‘‘It also does not affect the cooperative’s ability in any way to operate and pay its bills, including paying farmers for their milk.’’
Fonterra has been conducting a review of the business over the past year after posting an after-tax loss of $196m for the 2018 financial year, its first annual loss in 17 years.
‘‘All numbers are subject to the board reviewing the full financial statements . . .’’
Fonterra