Fonterra (NZX:FCG): What were the results of its elections 2021?

Highlights

• Fonterra announced its 2021 election results on Wednesday.
• Voting was done for FCG’s Board of Directors, Directors’ Remuneration Committee and the Co-operative Council.
• Global dairy prices witnessed a rise in the global auction due to tight milk supply.

Fonterra Co-operative Group Limited (NZX:FCG) released the findings of this year’s elections for FCG’s Board of Directors, Directors’ Remuneration Committee and the Co-operative Council on Wednesday.

Present Directors Peter McBride, Leonie Guiney and John Nicholls were re-elected to Fonterra’s Board for 3 more years after shareholders’ voting. Shareholders also re-elected current representative, Stephen Silcock, and new member, Richard Stalker, to the Directors’ Remuneration Committee.

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In Co-operative Council elections, Don Hammond was re-elected for the Northern Bay of Plenty while Karyn Johnson and Simon Tripe defeated their opponents for Central Taranaki and Tasman/Marlborough ward, respectively. Moreover, nominees were elected unconstrained in 7 other Co-operative Council wards.

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All successful candidates will be assuming their respective offices after the close of the annual meeting on 9 December 2021.

Weak milk production in NZ and abroad

Prices in the latest Global Dairy Trade Auction touched a 7-year high, increasing 1.4% overnight to cross its March 2014 peak. Global dairy prices soared due to tight milk supply, supported by weak production in NZ and overseas.

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As per FCG’s global dairy update provided on 3 December, NZ’s milk production fell 3.3% on a litres basis in October this year compared to the same month in 2020 due to changeable weather patterns across NZ. The monthly production of milk was also down for Australia and the European Union for September 2021 compared to the same month in 2020.

Fonterra’s NZ milk supply is likely to end the season down by 0.9%. This propelled FCG to predict a record farmgate milk price for its suppliers in this period.

Farmgate milk price range raised for 2021-22 season

Fonterra lifted its milk price forecast range for the 2021-22 season. It lifted the farmgate milk price range from $7.90-$8.90 per kgMS to $8.40-$9 per kgMS. The mid-point of $8.7 per kgMS is the highest paid to farmers since the dairy company was established in 2001.

The Co-operative also revised its earnings guidance from 25-40cps to 25-35cps.

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Fonterra Chief Executive Miles Hurrell stated that the increase in its milk price forecast range could put a strain on its margins and earnings. Hence, the dairy company has lowered the top end of its earnings guidance.

On 8 December, at the time of writing, FCG was trading flat at $3.14.

Bottom Line

Fonterra is due to see the voter turnout on the change to its capital structure this week after its AGM on 9 December.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)