26 May 2023

2 minute read

By: Melanie Epp

Oceania

New Zealand's Fonterra Co-operative Group lifted its fiscal 2023 earnings forecast on Thursday and said expects to pay a lower price for milk to its farmers, reported Reuters.

The dairy giant expects to pay NZ$7.25 to NZ$8.75 ($5.55) per kilogram of milk solids (kgMS) for the financial year 2023-24.

Fonterra also narrowed its 2022-23 farmgate milk price range to NZ$8.10 to NZ$8.30 per kgMS from an earlier range of NZ$8.00 to NZ$8.60 per kgMS, due to reduced short-term demand, particularly from China.

"We expect demand to gradually strengthen over the course of as China's economy continues to recover from COVID-19," CEO Miles Hurrell said in a statement.

"However, the timing and extent of this remains uncertain, with China's in-market whole milk powder stocks estimated to be above normal levels following increased domestic production."

Meanwhile, the company posted profit after tax of NZ$1.33 billion ($843.75 million) for the third quarter, compared with NZ$472 million a year earlier, helped by strength in its ingredients business and higher margins in the cheese and protein portfolio.

Consequently, Fonterra expects normalised earnings for this fiscal year in the range of 65-80 New Zealand cents per share, higher than its earlier forecast of 55-75 cents.

The dairy firm is also bringing forward the payment date of its proposed capital return of around 50 NZ cents per share and unit to August from October.

($1 = 1.5763 New Zealand dollars)