Fonterra shares halt as earnings reviewed

Farmers are in for another surprise from dairy giant Fonterra after it placed its shares in a trading halt yesterday.

Fonterra said in a statement to the New Zealand stock exchange that as it was preparing its financial statements for the year ended July 31 it realised there might be a variation from earlier earnings forecasts.

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

Fonterra said it expected to be in a position to update the sharemarket and investors by close of trading today.

The statement prompted speculation on share-trading website Sharetrader that Fonterra might be about to announce a significant profit downgrade. But others were hoping the earnings guidance might be an upward revision caused, for example, by a weaker New Zealand dollar.

Arie Dekker, who is head of institutional research at First NZ Capital, doubted the trading halt would be due to further writedowns for Fonterra’s Beingmate Chinese joint venture, but he 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 when a halt was called ‘‘it’s not usually good news’’, he said.

He’d spoken with 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.’’

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 at

10am on Monday, the company said.

In May Fonterra revised down its forecast dividend range for the year to between 15 cents and

20c per share, and normalised earnings per share for the 2018 season down to 25c to 30c per share.

The company wrote down more than $400 million from its troubled $750m investment in 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.

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