New Zealand dairy giant Fonterra has lowered its full-year earnings forecast due in part to the impact of the country’s drought on international dairy prices.
Fonterra said EBIT for the 2013 financial year ending 31 July will likely be lower than the forecast outlined in the prospectus for the Fonterra Shareholders Fund, which was launched last year.
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The co-operative said the combined impact of the drought and the reshaping of its Australian business meant its forecast for normalised EBIT was now likely to be around NZ$1bn – just below the prospectus forecast of $1.08bn.
The revised figure is subject to continued volatility in dairy prices, foreign exchange and other market uncertainties that might occur in the final month of the fiscal year, it said.
Fonterra confirmed the 2013 forecast cash payout to farmer shareholders of $6.12 would remain unchanged and it reaffirmed its EPS guidance range of 45-50 cents per share, but said this was now likely to be at the lower end of the range.
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Fonterra CEO Theo Spierings said “unprecedented volatility” caused by the “extreme drought” in New Zealand earlier this year, and the “acceleration of the reshaping of Fonterra’s Australian business”, had affected earnings.
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By GlobalData“Our Australian business remains under pressure. Although a recovery plan is being implemented, it is in its early stages and will not counteract the impact on earnings of intense competition and the accelerated reshaping of our business,” Spierings said.
