Fonterra Cooperative Group (NZX:FCG) raises earnings forecast, here’s why

September 09, 2022 03:31 PM NZST | By Manika
Follow us on Google News:


  • FCG lifts its earnings forecast for FY23 due to ongoing dairy demand
  • Lowers its milk collection forecast due to weather conditions
  • Its cheese and protein portfolio drove demand

Fonterra Cooperative Group (NZX:FCG), the world’s biggest dairy exporter, raised its earnings forecast for FY23 to 45 to 60 cents per share, up from 30 to 45 cents per share, due to the ongoing increased demand for dairy.

The Company also revised its forecast for milk collections for the 2022/2023 season, down from 1,510 million kg of milk to 1,495 million KgMS due to wet weather.

Last month, FCG said that 2021-22 earnings per share would be the top end of its 25-35 cents guidance range. The increase in forecast earnings is due to strong demand for dairy, which also led to strong earnings in FY22. 

                                                      Source: © 2022 Kalkine Media®

Reasons for the raise

Fonterra Miles CEO Hurell says that the demand signals that were there by the end of FY22 have continued to drive improved prices and higher margins across a portfolio of non-reference products, particularly cheese.

There is a surge in demand and the latest increase in prices of whole milk powder has also seen a reversal of the recent easing of prices.

Besides that, strong offshore prices for protein as reflected in recent prices in the EU and US milk prices, also signal that the protein portfolio has done well, he added.

CEO speaks

Mr Hurell said this sustained period of favourable pricing between the company’s protein and cheese portfolios and whole milk powder is the main driver for the increase in the 2023 earnings guidance range being announced on Friday.

The dairy company is committed to its 2030 targets and expects variable market conditions as it moves towards them. He also said that the benefit of being part of the Co-operative is to have a diversified organisation with an extensive portfolio of products that capture value in a broad range of market conditions.

Mr Hurell said that the company’s strategy was based on the growing demand and constrained supply. It will focus on shifting farmers’ milk to higher-value products. He also said that recently the Co-operative had seen a reduction in milk collections due to wet weather conditions. However, the company will continue to work with the impacted farmers to ensure that if they need extra support, they get it.

Recently, global dairy prices also rose in the global dairy trading auction (GDT). The average price at the fortnightly sale increased 4.9% to US$4001 per tonne after falling 2.9% in the previous auction.

In this auction, the price of whole milk powder was up 5.1%, and other product prices like butter, cheddar, and skim milk powder also increased.

The stock was trading up 4% by mid-day trade.





The content on this website, including, but not limited to, any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (“Content”) is a service provided by Kalkine Media New Zealand Limited (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide financial advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests users seek financial advice from a financial advice provider, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all liability to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without any express or implied warranties of any kind. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit a source wherever it is indicated or is found to be necessary or desirable.

Top Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK