Fonterra in trading halt
Investors wait for answers as co-op reviews financial forecast
Fonterra is expected to reveal today whether it needs to change its earnings forecasts after units in the co-op’s shareholder fund were placed in a trading halt. Market sources were reluctant to speculate on what that change would be, although they noted that higher milk prices meant higher costs for Fonterra.
The farmgate milk price for the season just finished was $6.75 per kilogram of milk solids — which is high by historical standards.
“Fonterra is currently preparing its annual financial statements for the financial year ended 31 July 2018,” the co-op told the NZX yesterday. “As a result of the work being undertaken there may be a variation from the earnings guidance previously given to the market. Fonterra is working to determine whether this is the case and expects to be in a position to notify the market by the close of business on 10 August 2018,” it said.
Fonterra cut its earnings forecast to 25c-30c a share and its dividend to 15c-20c in May. Prior to the halt, units in the Fonterra Shareholders’ Fund were trading at $5.11.
In March, Fonterra posted a firsthalf net loss of $348 million due to a $405m write down of its 18.8 per cent investment in Chinese infant milk formula company Beingmate and a $183m settlement with Danone following their dispute over the 2013 whey protein recall.
Newly-minted Fonterra chairman John Monaghan is presiding over today’s board meeting after the company announced last month that John Wilson would be stepping down due to ill health.
Monaghan, who has been a director on the board since 2008, has taken over at a time when Fonterra and outgoing chief executive Theo Spierings have faced criticism due to
As a result of the work being undertaken there may be a variation from the earnings guidance previously given to the market.
Fonterra statement
the poor performance of the cooperative’s Beingmate investment and lacklustre earnings growth.
Spierings announced in March he would leave the position this year, and pressure had been mounting for Wilson to also step down.