Aussie milk co-op cuts its forecast
Fonterra’s opposite number in Australia, Murray Goulburn, has cut its milk price forecast and is looking at a 20 per cent fall in production, which it partly put down to unusually wet weather, this year.
The co-operative — Australia’s biggest dairy company — said in a statement to the Australian Stock Exchange that it would suspend its socalled milk supply support package, a three-year loan programme it offered in the wake of retrospective price cuts earlier in the year.
Murray Goulburn said “very wet climatic conditions” in southeast Australia would mean a cut in its milk intake by 2.7 billion litres this financial year. In New Zealand, Fonterra said this month that it was also facing lower production because of the wet weather.
The Australian co-operative had forecast a A$42 million after tax profit for the 2016-17 financial year, but said in the statement that its profit would “now be l ower given revised expectations for milk intake”. The company reported a A$40.6m net profit for 2015/16.
The company also lowered its forecast milk price to A$4.70 from A$4.88 a kg — below the A$5 a kg that is generally regarded as break even in Australia.
“Climatic conditions have quickly turned from very favourable settings in August, and are now a significant headwind for milk production,” it said.
“All regions are impacted, in particular the north and west of Victoria, where widespread flooding has impacted dairy herds and pastures,” the company said.
Murray Goulburn is one of Australia’s largest food and beverage companies with annual turnover of about A$2.8 billion.
The co-op has about 2200 supplier shareholders.
The co-op’s units, which trade on the ASX, were quoted at A$1.15 — down 4c from Wednesday’s close.
Jamie Gray
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