Fonterra has announced its opening farmgate milk price in a range of NZ$7.25kgMS – NZ$8.75kgMS for 2023/24 with a midpoint of NZ$kgMS. Fonterra chief Miles Hurrell said the opening forecast price for the new season reflects an expectation that China’s demand for WMP will lift during FY24 as the country’s economy recovers after COVID-19 lockdowns. Hurrell said the timing of China’s recovery remains uncertain as WMP stocks are estimated above normal levels due to a lift in domestic production. Fonterra also narrowed its 2022/23 forecast milk price to NZ$8.10kgMS – NZ$8.30kgMS from NZ$8.00kgMS – NZ$8.60kgMS.
Fonterra reported normalised profit after tax of NZ$1,078m, up NZ$606m, attributed to strong performance in its Ingredients channel, continued higher margins in Fonterra’s cheese and protein portfolio, particularly casein and caseinate. Favourable price relativities have continued longer than expected, trickling through to improved performances in Fonterra’s Foodservice and Consumer channels, in particular Global Markets. As a result the full-year forecast normalised earnings lifted to 65c-80c per share from 55c-75c per share, implying an annual earnings forecast range of NZ$1.05bn – NZ$1.29bn compared to a previous range of $885.1m – $1.21bn.
Meanwhile, Fonterra has fully transitioned to its new Flexible Capital Shareholding structure and according to its chief financial officer Neal Beaumont, the structure is functioning well so far with a good balance of buyers and sellers and good price discovery happening. Fonterra has not had to provide much of the NZ$300m in liquidity support allocated for a package of measures aimed at supporting farmers during the transition to flexible shareholding.