Fonterra hikes 2024 fiscal earnings

First quarter performance was strong
calendar icon 7 December 2023
clock icon 2 minute read

New Zealand's Fonterra Co-operative on Thursday increased its fiscal 2024 earnings and farmgate milk price forecasts, citing strengthening demand for reference commodity products from key importing regions, reported Reuters.

The company hiked the forecast range for its farmgate milk price - the price it pays to farmers - to between NZ$7.00 and NZ$8.00 per kilogram of milk solids (kgMS) from its prior range of between NZ$6.50 and NZ$8.00 per kgMS.

According to December's first GDT auction, Global Dairy Trade (GDT) prices rose, while volumes dropped.

The company has seen a rise in demand from countries including China during the first quarter after a recent gain in GDT prices.

The dairy giant also increased its fiscal 2024 earnings per share outlook to between 50 NZ cents and 65 NZ cents per share from prior expectation of between 45 NZ cents and 60 NZ cents and said it is on track for a "strong" interim dividend.

In the first quarter, Fonterra's profit after tax jumped 61.7% to NZ$346 million ($212.55 million) on the back of strong margins across operations.

The dairy firm attributed the lift in quarterly earnings to higher margins across the company’s three main sales channels - ingredients, food service, and consumer.

"Looking ahead, we expect these higher margins to continue throughout the first half of the year, before tightening across all three sales channels in the second half of the year," chief executive Miles Hurrell said.

The company reported first-quarter gross margin of 21.4%, up from 15.5%. 

($1 = 1.6279 New Zealand dollars)

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