Fonterra warns of lower earnings
Fonterra has warned its earnings for the 2013 financial year will be lower than forecast in the Fonterra Shareholders' Fund prospectus issued before units in the dairy giant were listed late last year.
But the dairy giant has confirmed farmer shareholders will still receive the forecast milk price and dividend of $6.12.
The current earnings per share guidance range of 45-50c per share also remains unchanged, though Fonterra cautions it is likely to be at the lower end of this range.
The annual dividend per share of 32c remains as forecast. Fonterra said the drought contributed to a 64 per cent rise in whole milk powder prices on its online Global Dairy Trade auctions since early this year, and this had had a temporary, but significant, negative impact on the margins of the NZ Milk Products business.
Chief executive Theo Spierings said although the financial year was yet over, the impact on earnings before interest and tax of unprecedented volatility caused by the ''extreme'' drought in New Zealand earlier this year and the acceleration of the restructuring of Fonterra's Australian business was sufficiently obvious for the cooperative to provide an update.
The combination of the effects of drought and the under-pressure Australian business meant forecast normalised ebit for the 2013 financial year was likely to be about $1 billion, below the forecast $1.079 billion stated in the Fonterra Shareholders' Fund prospectus.
The first half of the financial year delivered a strong performance on the back of price premiums, product mix, cost savings and productivity gains, Spierings said.
At the time of the company's interim results on March 27, Fonterra had cautioned the second half was likely to be more challenging, he said.
The Australian business remained under pressure and though a recovery plan is under way it is in the early stages and will not be enough to counter the inmpact on earnings of intense competition and the accelerated reshaping of the business, Spierings said.
Fonterra would provide a full update of its 2013 year result on September 25.A statement on forecast cash payout expectations - milk price and dividend per share - would made next week.