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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Scouring: Cavalier Merger Would Extract 'Monopoly Rents' - Godfrey Hirst

A merger of Cavalier Wool Holdings and New Zealand Wool Services International's two wool scouring operations would create a monopoly, says carpet maker Godfrey Hirst. The Commerce Commission on Friday released its second draft determination on the merger, maintaining its view that the public benefits would outweigh the loss of competition. More>>


Scoop Review Of Books: She Means Business

As Foreman says in her conclusion, this is a business book. It opens with a brief biographical section followed by a collection of interesting tips for entrepreneurs... More>>


Hourly Wage Gap Grows: Gender Pay Gap Still Fixed At Fourteen Percent

“The totally unchanged pay gap is a slap in the face for women, families and the economy,” says Coalition spokesperson, Angela McLeod. Even worse, Māori and Pacific women face an outrageous pay gap of 28% and 33% when compared with the pay packets of Pākehā men. More>>


Housing: English On Housing Affordability And The Economy

"Long lead times in the planning process tend to drive prices higher in the upswing of the housing cycle. And those lead times increase the risk that eight years later, when additional supply arrives, the demand shock that spurred the additional supply has reversed. The resulting excess supply could produce a price crash..." More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news