Fonterra chief executive Miles Hurrell said the higher forecast was a reflection of the ongoing demand for dairy products. Photo: RNZ / Dan Cook
Fonterra expects higher earnings but lower milk collections in the 2023 financial year.
The dairy co-operative has upgraded its earnings guidance to be between 45 to 60 cents per share, up from 30 to 45 cents per share.
Fonterra chief executive Miles Hurrell said the higher forecast was a reflection of the ongoing demand for dairy products that saw the company confirm its 2022 earnings at the top end of its guidance range.
"We see strong underlying demand and the latest lift in whole milk powder prices on GDT (Global Dairy Trade auction) is also a positive signal reversing the recent easing in the prices that drive our farmgate milk price," he said.
"Strong offshore prices for protein, as reflected in the recent increase in EU and US milk prices, mean our protein portfolio has been performing very well."
Hurrell said if current conditions persist there was a chance its earnings guidance could be raised once again.
The dairy giant also downgraded its forecast milk collection for the 2022/2023 dairy season from 1,510 million kilograms of milk solids (kgMS) to 1,496 million kgMS.
"We have recently seen a reduction in milk collections with weather conditions experienced in some parts of New Zealand causing a slow start to the season, most recently the floods in the Far North and top part of the South Island," Hurrell said.
"We'll continue to work with impacted farmers to ensure that if they need extra support that they are able to access it."