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

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news