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

 


Federated Farmers: NAIT Levy Increases Must Achieve Accurate, User-friendly System
Nobody welcomes extra costs but if OSPRI is to catch-up on under investment in the NAIT platform and deliver on its workability and farmer support, levy increases are probably necessary, Federated Farmers says... More>>



Westpac: More Job Opportunities, But Growth In Workers’ Earnings Remains Subdued

The Westpac McDermott Miller Employment Confidence Index rose 1.2 points in the December quarter, to a level of 106.9. This was the sixth straight rise in the index since the Covid-19 lockdown in 2020. Michael Gordon, Acting Chief Economist for Westpac, noted that the rise in the index has largely been driven by perceptions... More>>




Statistics: Card Spending Continues To Increase As COVID-19 Restrictions Ease

The busy Christmas period combined with easing COVID-19 restrictions helped to increase card spending in December 2021, Stats NZ said today... More>>

TradeMe: Job Market Ends 2021 On A High With Record Number Of Vacancies
The New Zealand job market finished 2021 on a high note, with the ball still firmly in the job hunters’ court, according to the analysis of 69,600 vacancies listed on Trade Me Jobs for the quarter ending 31 December (Q4)... More>>


Insurance Council of New Zealand: September South Island Windstorm Cost $36.5 M Raises 2021 Extreme Weather Claims Total To $321.6 M

Gale force winds and storms between 9 and 13 September 2021 resulted in insurers supporting communities to the tune of $36.5 m. This is a significant rise, of $16.7 m, on preliminary figures for the event and lifts the end of year total for all extreme weather events in 2021 to $321.6 m... More>>


Statistics: Building Consents Hit New Highs In November
There were a record 48,522 new homes consented in the year ended November 2021, Stats NZ said today. This was up 26 percent compared with the year ended November 2020... More>>