News Annual figures 2019
Fonterra is heading for monster loss
Fonterra is in heavy waters. The New Zealand dairy giant is heading for a loss of hundreds of millions of New Zealand dollars. The member dairy farmers can thus whistle about their dividend.
Fonterra will only finalize the balance sheet for the past financial year (from July 2018 to June 2019) in September, but it is already known that those figures are turning out badly. The loss is estimated to be between $590 and $675 million. This will be the second loss in a row, because the dairy cooperative came last year even $186 short. In the years before that, the cooperative only wrote profit figures.
Many setbacks
Fonterra is facing major setbacks in various markets and therefore has to make hefty write-offs. For example, the cooperative has to write off $200 million in Brazil on the joint venture 'Dairy Partners America'. Australia is also experiencing difficulties due to the drought. Milk supply has dried up considerably, which has increased competition between processors and factories are not running at full capacity.
In addition, the activities in China are not doing well. Fonterra has invested hundreds of millions in the development of dairy farms in China† However, that investment will not pay off. Fonterra's top management is therefore considering disposing of this project. Fonterra also wants to increase its interest in the Chinese Beingmate sell through the stock exchange. This joint venture has been a problem for years.
No dividend
This disappointing performance is a hard blow for the more than 10.000 member dairy farmers of the cooperative. For the first time in history, they will not receive a dividend. Hurrel acknowledges that his policy is not popular in the short term, but he believes it is necessary to get Fonterra back on the map in the longer term. The cooperative is trying to recover by focusing on the 'core business'.
(1 New Zealand dollar = €0,57)
Wouter Job
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