Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fonterra on track to break the $20 billion barrier

29 March 2012

Fonterra on track to break the $20 billion barrier

Fonterra Cooperative Group’s half year results mean it could be on track to break the $20 billion revenue barrier; corporate New Zealand’s equivalent of the four minute mile.

“The word ‘up’ is Fonterra Cooperative Group’s impressive performance for the first half of the financial year,” says Willy Leferink, Federated Farmers Dairy chairperson.

“While full-year revenues last financial year were a smidgen below $20 billion, Fonterra could be poised to become the first New Zealand company to smash the $20 billion revenue barrier. That’s not just big for New Zealand, that’s pretty big globally.

“At this point last year Fonterra’s half-year profit was $293 million, but in 2012, that’s grown to $346 million.

“The big question for farmer-shareholders is whether the year’s back end will remain as strong.

“Signals from the globalDairyTrade auction platform are that soft commodities are undergoing a price correction. That’s been expressed in Fonterra’s recent downwards revision of the in-season forecast and price corrections our colleagues are seeing for meat and fibre.

“That’s why we’re increasingly concerned at the dollar’s strength. The dollar ought to be tracking down in concert with what our exports are doing.

“If the high dollar continues, it will start to cause problems. This is why farmers should base their budgets on less than $6 per kilogram of milksolids. Anything more is extremely brave.

“Great farming weather, excluding some regions, drove a ten percent increase in milk volumes. It underscores why water storage and government policy on water is economically vital. We cannot bank on Mother Nature to behave like some weather metronome.

“New Zealand isn’t the only country to enjoy exceptional growing conditions either. While we face added competition the global population growth trend is New Zealand’s friend. One billion people now join the human race every decade.

“Reliably growing milk volumes underpin Fonterra’s strategy refresh. This is about getting into growing markets on the ground floor and in that respect, we’re in the right part of the world at the right time.

“Federated Farmers believes Fonterra has the capital means to take advantage of new markets and opportunities. This is by using retentions and a gearing ratio now at 47 percent.

“Last financial year, for instance, Fonterra retained 35 cents per kilogram of milksolids and that translated into about $470 million. It has to be remembered Federated Farmers pushed Fonterra hard to develop a retentions policy; it’s only a recent evolution.

“We’re excited to see Fonterra plan to grow milk supply outside of New Zealand, so long as the parent Fonterra brand is firewalled. New Zealand farmers would be nervous if our reputation was based on what farm workers did or didn’t do overseas.

“Since 2002, Fonterra has paid out over $60 billion to its farmer-shareholders. That doesn’t take into account what it spends as a company in its own right. Every New Zealander gets to benefit from the direct and indirect economic activity these vast sums generate.

“Fonterra is to New Zealand what Nokia is to Finland,” Mr Leferink concluded.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news