News Annual figures
Fonterra doesn't have things in order
Fonterra has to incur a loss of NZ $2017 million ($) over the past financial year (July 2018 to June 196). It is the first time that the annual result has turned out negative. In their own words, the result is an accumulation of incidents.
The contrast with the results of 1 year earlier is great; then Fonterra made a profit of $745 million. Miles Hurrel, CEO of the New Zealand dairy, can therefore look back on a disappointing year. "We have not kept the promises to our shareholders and farmers." The substantial loss is, however, somewhat distorted by one-off charges.
Bad luck in China
For example, Fonterra is involved in a Chinese baby powder scandal. At the end of 2017, the cooperative had to pay a $232 million claim to French dairy Danone. In addition, Fonterra had to write off $405 million on an investment in the Chinese milk powder producer Beingmate.
The CEO also points out a number of reasons that have had a negative impact on the result. "Although making forecasts is always difficult, they have been too optimistic this year," explains Hurrel. Fonterra, for example, had estimated that the butter price would fall more. This put pressure on margins. In addition, the basic milk price (in retrospect) was too high. Operating expenses also rose, Hurrel said.
Dividend down
The red numbers affect the dividend that the cooperative pays out to its members. Initially, Fonterra promised to pay from $0,45 to $0,55 per share, but that has plummeted to $0,10 per share. For the coming year, the dairy expects to pay a dividend of between $ 0,25 and $ 0,35 per share.
In order to bend the result, Fonterra takes a critical look at all components. The focus is on cost control. The milk price forecast for the 2018/2019 season, it remains at $6,75 per kilo of milk solids (MS), although this has already been adjusted downwards at an earlier stage. By New Zealand standards this can be seen as a good milk price.
€1 = 1,77 NZ Dollar
Wouter Job
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