Fonterra Co-operative Group Limited reported it had increased its previous forecasted earnings guidance for 2023 from 30 to 45 per cent per share to 45 to 60 per cent per share.
Along with the announcement, Fonterra also revised its estimated milk collections for 2022-2023 from 1,510 million kgMS to 1,495 million kgMS.
According to Fonterra CEO Miles Hurrell, the increase in anticipated earnings is a continuation of the consistently high demand for dairy, which led Fonterra to confirm its FY22 earnings were at the top end of the guidance range.
“This demand signals we saw at the end of FY22 have continued driving improved prices and higher margins across our portfolio of non-reference products, particularly in cheese and our protein products such as casein,” Hurrell said.
Underlying solid demand was observed, according to Hurrell, and the recent increase in whole milk powder prices on Global Dairy Trade (GDT) is also a sign that the recent decline in the prices that determine the Farmgate Milk Price is turning around.
“This sustained period of favourable pricing relativities between our protein and cheese portfolios and whole milk powder is the main driver for the increase in the FY23 earnings guidance range being announced today. If these unprecedented conditions were to continue for a further extended period this could have an additional positive impact on forecast earnings,” he added.
At this point in the season, according to Hurrell, the Co-op is at ease with its contracted rate for FY23, particularly for its protein portfolio, but it’s still early.
Hurrell committed to working with farmers impacted by milk collections to guarantee that help will be accessible should it be needed.
