Dairy giant Fonterra has lowered its forecast for annual earnings in its next financial year, blaming currency fluctuations and “difficult” trading conditions in Australia and New Zealand.
The New Zealand company said today (28 August) it now predicts net profit after tax will hit NZ$0.40-0.50 a share in the 2012/13 year, compared to a May forecast of NZ$0.45-0.55.
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Chief executive Theo Spierings pointed to “unfavourable foreign exchange translation effects in many markets” and “a difficult retail environment” affecting Fonterra’s business in Australia and New Zealand.
The reduction to Fonterra’s profit forecast meant the company lowered the payout it expects its farmers to receive in its current financial year. It cut its payout forecast by NZ$0.30 to NZ$5.65-5.75.
Fonterra said the strength of the New Zealand dollar was hitting the price it expects to pay farmers for milk.
However, Spierings said Fonterra could see “early signs of strengthening dairy prices” amid the extreme weather in the US and Europe hitting local grain production.
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By GlobalDataNevertheless, he warned farmers to be “cautious” as any gains could be affected by the strength of the New Zealand dollar.
