Fonterra steps up its milk price game again

The higher expected price of Fonterra only applies to New Zealand dairy farmers. For them, 50 dollar cents will be added and the expected average price will go from NZ $9,50 to NZ $10,00 per kilo of fat and protein for the current season (more than €42,00 per 100 kilos). The dividend expectation remains unchanged for the time being.

For Fonterra's dairy farmers in Australia, there is less good news. There, the milk price has been 'brought more into line with global commodity prices', writes CEO Miles Hurrell very diplomatically. After all, Australian dairy farmers are not members either.

The new milk price increase coincides with the announcement of the results for the first quarter of the new financial year of Fonterra. Hurrell reports that less volume was sold than in the first quarter of the previous financial year, but that a higher price per product sold was achieved, mainly due to good results in the food business and consumer dairy. The ingredients division suffered from slightly lower margins. The profit after tax for the first quarter came to NZ $263 million (€147 million).

Fonterra's expectations for the coming months remain positive, as both the EU and the US are producing less milk than last year and will therefore have less presence on the world market, while New Zealand has started the new season very strongly since this summer.

Fonterra is continuing with its planned divestment of its Australian branch and other business units, Hurrell reports, without being very specific about this. In the meantime, Fonterra is investing heavily in factories and storage and distribution centres in New Zealand. A total of almost €210 million has been earmarked for this, of which almost €84 million is for a production line for UHT cream, intended primarily for the Chinese food market.