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

 


Fonterra says price gap between dairy products easing

Fonterra says price gap between milk powder vs casein and cheese is easing

May 12 (BusinessDesk) - Fonterra Cooperative Group, which posted a 53 percent drop in first-half profit as gains in prices of milk powder ran ahead of products such as casein and cheese, says the gap is becoming less pronounced – a sign that pressure on margins may ease.

Prices of reference commodity prices used to calculate the farmgate milk price– whole and skim milk powder, butter milk powder, butter and anhydrous milk fat – rose 44 percent to $5,981 a tonne in the third quarter while non-reference product prices, cheese and casein, rose 22 percent to $7,499 a tonne.

That’s a smaller gap than in the first quarter, when prices gained 62 percent and 22 percent respectively, the Auckland-based company said in its latest global dairy update.

Last November, Fonterra took a $157 million provision against inventory of specialised ingredients and branded consumer products produced by its NZ Milk Products division because rising input costs squeezed margins. In March this year, it posted a slump in first-half earnings as gross margin shrank to 12.5 percent from 18.6 percent.

The company has said it can’t process more milk into higher returning milk powder products until it builds more driers because of the mix of its factories, which can produce milk powder versus cheese and casein at a ratio of 75 percent to 25 percent.

The volume of sales of reference commodity prices shipped fell 2 percent in the third quarter as Fonterra took advantage of higher prices to ship more volume earlier in the year, while some was contracted for shipment in the fourth quarter. The volume of non-reference products shipped fell 13 percent.

Total production volume rose 21 percent in the third quarter, reflecting the impact of drought in the same quarter of 2013.

Milk collection across New Zealand for the 11 months ended April 30 rose 8 percent to 1,524 million kilograms of milk solids.

Units of the Fonterra Shareholders’ Fund were unchanged at $6.0.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Leighton-Led WGP To Build, Manage Transmission Gully

The Wellington Gateway Partnership, led by a unit of ASX-listed Leighton Holdings, has won the $1 billion contract to build the Transmission Gully road north of Wellington. More>>

ALSO:

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news