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Ann: FORECAST: FCG: Revised Forcast Farmgate Milk Price and...

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    • Release Date: 29/07/14 16:23
    • Summary: FORECAST: FCG: Revised Forcast Farmgate Milk Price and Estimated Dividend
    • Price Sensitive: No
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    					FCG
    29/07/2014 16:23
    FORECAST
    
    REL: 1623 HRS Fonterra Co-operative Group Limited
    
    FORECAST: FCG: Revised Forcast Farmgate Milk Price and Estimated Dividend
    
    FONTERRA REVISES FORECAST FARMGATE MILK PRICE FOR 2014/15 SEASON AND
    ANNOUNCES ESTIMATED DIVIDEND
    
    Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk
    Price for the 2014/15 season from $7.00 to $6.00 per kgMS and announced an
    estimated dividend range of 20-25 cents per share - amounting to a Forecast
    Cash Payout of $6.20-$6.25 for the current season.
    
    Chairman John Wilson said the lower forecast Farmgate Milk Price reflected
    continuing volatility, with the GlobalDairyTrade price index declining 16 per
    cent since the start of the season on June 1.
    
     "We have seen strong production globally, a build-up of inventory in China,
    and falling demand in some emerging markets in response to high dairy
    commodity prices.  In addition, the New Zealand dollar has remained strong.
    Our milk collection across New Zealand last season ending 31 May 2014 reached
    1,584 million kgMs, 8.3 per cent higher than the previous season.
    
    "This drop in the forecast Farmgate Milk Price will have an impact on our
    farmers' cash flows.  We continue to urge caution with on-farm budgets in
    light of the continuing volatility in international dairy markets," said Mr
    Wilson.
    
    Chief Executive Theo Spierings said the increase reflects the Co-operative's
    expectations for improved returns on its value-add and branded products,
    given volume increases and lower input costs.
    
    "As we continue to drive for growth in our consumer and foodservice
    businesses, during the first half of the current financial year we expect
    reduced cost of goods arising from lower dairy commodity prices to have a
    positive impact on returns.
    
    "It is important to note that in light of the significant volatility, our
    dividend estimate is based on zero ingredients stream returns at this early
    stage in the season.
    
    "We continued driving our V3 strategy throughout the previous season and that
    is why we can support an increased estimated dividend range for the 2014/15
    financial year.
    
    "Our forecasting anticipates some recovery in global dairy prices but it is
    too early to predict how strong this recovery will be or when it will kick
    in.
    
    "We will provide an update on business performance when we announce our
    Annual Result on 24 September 2014," said Mr Spierings.
    End CA:00253232 For:FCG    Type:FORECAST   Time:2014-07-29 16:23:42
    				
 
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