Fonterra Co-operative Group Limited today announced its third-quarter business update, narrowed the range for its 2019/2020 forecast Farmgate Milk Price, and announced an opening forecast Farmgate Milk Price range for the 2020/2021 season.
Third quarter summary:
- Total Group Earnings Before Interest and Tax (EBIT): $1.1 billion, up from $378 million
- Total Group normalised EBIT: $815 million, up from $514 million
- Total Group normalised gross margin: $2.5 billion, up from $2.2 billion
- Normalised Total Group operating expenses: $1,665 million, down $148 million from $1,813 million
- Free cash flow: $698 million, up $1.4 billion
- Net debt: $5.7 billion, down from $7.4 billion
- Normalised Ingredients EBIT: $668 million, up from $615 million
- Normalised Foodservice EBIT: $208 million, up from $135 million
- Normalised Consumer EBIT: $187 million, up from $128 million
- Full year forecast underlying earnings: 15-25 cents per share
- 2019/20 forecast Farmgate Milk Price range: $7.10 – $7.30 per kgMS
- Opening 2020/21 forecast Farmgate Milk Price range: $5.40 – $6.90 per kgMS
- 2020/21 Advance Rate Schedule has been set off the mid-point of $6.15 per kgMS
Fonterra CEO Miles Hurrell says despite COVID-19 challenges, the Co-operative’s total group normalised Earnings Before Interest and Tax (EBIT) for the nine months to 30 April is $815 million, an increase of $301 million on this time last year.
“The work done over the last year to strengthen our balance sheet, and the Co-op’s ability to respond quickly has helped us manage the COVID-19 situation over the last few months. We’re drawing on our global supply chain and diverse product and customer base to minimise disruptions for our customers and our business.
“COVID-19 has affected virtually every country, market and industry, and as a result, the global dairy market is volatile and the outlook is uncertain. This is a tough environment for everyone. As a New Zealand dairy Co-op, exporting 95% of our products, many of the markets we do business in have always been prone to sudden shocks and this can impact where, when and what we sell. However, the global nature of COVID-19 is like nothing we’ve experienced before. Like other businesses, we will feel the impact of COVID-19 and its flow-on effects but how and to what extent is still uncertain. We are drawing on all our experience in managing market volatility.
“I’m proud to lead a team who genuinely care and recognise the importance of our farmer owners, unit holders, customers and local communities. The way our Co-op has responded to COVID-19 has been a real highlight for me.” For more visit Fonterra.com