Fonterra upgraded its earnings guidance to 50 – 70 cents per share from 45 – 60 cents per share and lowered and narrowed its forecast Farmgate Milk Price range of $8.50 – $10.00 per kgMS to $8.50 – $ 9.50 per kgMS, with a midpoint of $9.00 while holding its advance rate. It also reported a strong start to the 2023 financial year.
Fonterra CEO Miles Hurrell said it was a positive start to the year given the current global operating environment. “We continue to feel the impact of geopolitical and macroeconomic events, with higher costs at every point in our supply chain. It’s a similar story behind the farm gate with our farmer shareholders managing significantly higher input costs.
“Globally, milk supply from key exporting regions is down over the last 12 months. Production in Europe and Australia continues to be down, with US milk supply showing a slight improvement in recent months. Here in New Zealand, our milk production is down 2.9% on the same point last season.
“Global market volatility has prompted some softening of demand for whole milk powder, particularly in Greater China and this is reflected in our forecast Farmgate Milk Price range. We’ve seen increased participation from other regions which has offset in part the drop in demand from Greater China. While it’s still early in the financial year, we are happy with our sales contract rate.”