Fonterra sticks with milk forecast
Fonterra has reaffirmed its farmgate milk price and earnings forecasts for the year, despite uncertainty surrounding the outbreak of the coronavirus in China.
The co-op said its farmgate milk price forecast range would remain at $7.00-7.60 per kg and its full-year underlying earnings guidance would stay at 15-25 cents per share.
However, Fonterra has revised its forecast milk collections for the 2020 season down from 1530 million kgMS to 1515 million kgMS, due to adverse weather.
“The momentum we saw in the first three months of the financial year has continued, and as we approach the interim results our underlying earnings are tracking well,” chief executive Miles Hurrell said.
“However, given the potential significant risks that could arise from coronavirus in the second half, we are taking a prudent approach and maintaining our full-year forecast earnings range,” he said.
He said the outbreak was affecting Fonterra’s foodservice customers in China.
“The current situation is very fluid and uncertain. However, we have already contracted a high percentage of our 2020 financial year’s milk supply and this is helping us manage the impact of coronavirus.”
There had been a slow-down in processing of containers at ports and Fonterra was managing the flow of product into China carefully to avoid congestion. Fonterra’s products were continuing to be cleared by customs and quarantine officials.
In China, people continued to face movement restrictions due to the outbreak.
“This means many restaurants and food outlets are closed, which is having a major impact on the operations of our foodservice customers.
“Our sales teams are working with these customers to help them where they can,” he said.