Fonterra shares halt as forecast reviewed

Shares in giant dairy co-operative Fonterra have been placed in a trading halt.

In a statement to the New Zealand stock exchange yesterday, Fonterra said that as it prepared its annual financial statements for the year ended July 31 it realised there may be a variation from earlier earnings forecasts.

‘‘Fonterra is working to determine whether this is the case,’’ the statement said.

It expects to be in a position to update the NZX and investors by close of trade today.

The trading halt applies to Fonterra shares on the NZX, the Australian stock exchange and the Fonterra Shareholders Market. The latter is a private market on which only Fonterra farmer shareholders, Fonterra and a specially appointed market maker can trade Fonterra shares.

Before the halt Fonterra shares were trading at $5.11 – down nearly 19 per cent this year.

The trading halt will remain in place until an announcement is made by the co-operative, or by the sharemarket open on Monday, it said.

In May Fonterra revised its forecast dividend range for the year down to between 15 cents and 20c per share, and normalised earnings per share for the 2018 season down to between 25c and 30c per share.

The company wrote down more than $400 million from its troubled $750m China investment, Beingmate, earlier this year and recorded a half-year loss of $348m. It was also ordered to pay out $183m to global infant formula maker Danone for the 2012 botulism scare.

Publicly listed companies put trading halts in place when it is considered that a halt is required to comply with continuous disclosure obligations, or where a company considers a market exists that could be materially influenced by false or misleading price-sensitive information.

Fonterra would not provide any further comment.

The future leadership of Fonterra is currently up in the air, with chief executive Theo Spierings stepping down later this year.

John Wilson also resigned as Fonterra chairman last month. John Monaghan, who has been on the board since 2008, was named as the new chairman.

Arie Dekker, who is head of institutional research at First NZ Capital, doubted the trading halt would be due to further writedowns being needed for Fonterra’s Beingmate joint venture, but did not know the cause.

Federated Farmers national dairy chairman Chris Lewis said he had not heard of anything that could have led to the halt, such as a sudden downturn in production volumes. But, he said, when a halt was called ‘‘it’s not usually good news’’.

Lewis had spoken to some farmer friends, and they were as in the dark as he was, and were deep in a seasonal spike in the hours they had to work.

‘‘They are calving. This is the last thing they want to hear about or talk about.’’

‘‘[Farmers] are calving. This is the last thing they want to hear about.’’ Chris Lewis, Federated Farmers