Fonterra lifts forecast range for farmgate milk price

Chief executive Miles Hurrell also announced Fonterra was progressing with the sale of its consumer business. Photo / Fonterra

By RNZ

Fonterra has narrowed its forecast farmgate milk price and lifted the mid-point for this season thanks to rising global dairy prices.

The mid-point is up 50 cents to $9.50 a kilogram of milk solids (kgMS).

The forecast range has also improved from $8.25-$9.75 per kgMS to $9.00-$10.00 per kgMS.

Chief executive Miles Hurrell said strong demand for dairy products in China, Africa, the Middle East and Southeast Asia has helped push up prices in recent Global Dairy Trade auctions.

“Looking ahead, we’ll closely monitor any factors that could have an impact on supply and demand.

“This would include any significant change to milk supply in New Zealand over the second part of the season which could lead to pressure on global milk prices.”

Hurrell also announced Fonterra is progressing with the sale of its consumer business as well as integrated businesses Fonterra Oceania and Fonterra Sri Lanka.

The co-op announced in May it was looking at selling the consumer arm of the business which includes well-known brands like Anchor, Mainland and Kāpiti.

Hurrell said since then Fonterra has received meaningful buyer interest and advisers have been appointed to assist with the sale.

“We have been working with our team of advisers to assess potential divestment options, the assets and businesses in scope, and the best pathway to maximise value for our co-op.

“This work, coupled with the confidence we have in our revised strategic direction, has confirmed a divestment of our global consumer and associated businesses is in the best interests of the co-op.

“Through the scoping phase, we have assessed both a trade sale and IPO as attractive divestment options and will now prepare for a sale process which will pursue both options,” he said.

“We will thoroughly test the terms and value of both a trade sale and IPO with the market before seeking support from farmer shareholders for a divestment option through a vote.”

- RNZ