Fonterra's annual earnings look set to fall short of its prospectus forecasts when the company reports its result for the July 31 financial year tomorrow.
The result, which will not capture the costs involved in August botulism scare and subsequent product recall, is expected to reflect the combined effect of last summer's drought and difficult trading conditions in Australia.
Mark Lister, head of private wealth research at Craigs Investment Partners, said attention would most likely centre on the costs to production and the financial follow-on effects from the botulism scare, which turned out to be ill-founded. "It's hard to see a scenario where there is no financial impact in that regard."
The Fonterra Shareholders' Fund unit price, after initially being sold down to $6.50 on the back of the scare, quickly rebounded, closing yesterday at $7.18.
Fonterra said in July that its normalised earnings before interest and tax were likely to be around $1 billion, down 7.3 per cent from the forecast contained in last year's offer documents for the Fonterra Shareholders' Fund.