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BRIEF-Fonterra Co-Operative Group Raises Forecast Farmgate Milk Price

Published 05/12/2019, 07:01 am
Updated 05/12/2019, 07:07 am
BRIEF-Fonterra Co-Operative Group Raises Forecast Farmgate Milk Price
FCG
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Dec 5 (Reuters) - Fonterra Co-Operative Group Ltd FCG.NZ :

* HAS INCREASED THE MID-POINT OF ITS 2019/20 FORECAST FARMGATE MILK PRICE RANGE BY 25 CENTS TO $7.30 PER KGMS

* FY NEW ZEALAND MILK PRODUCTION IS FORECAST TO BE UP 0.5% ON LAST YEAR

* Q1 GROSS MARGIN OF $740 MILLION, UP FROM $646 MILLION

* FONTERRA EXPECTS THERE TO BE SEVERAL ONE-OFF ADJUSTMENTS THAT WILL IMPACT REPORTED EARNINGS

* 2019/20 FORECAST FARMGATE PRICE RANGE IS NOW $7.00-$7.60 PER KGMS

* "FOCUS IS STILL REDUCING OUR DEBT, SO IT IS NO MORE THAN 3.75 TIMES OUR EARNINGS"

* SALES VOLUMES WERE UP 43% AND GROSS MARGINS WERE UP $23 MILLION IN THE FIRST QUARTER ON A YEAR-ON-YEAR BASIS

* Q1 REVENUE $4.3 BILLION, UP FROM $3.8 BILLION

* TO REDUCE DEBT CO WILL BE REQUIRED TO LOWER CAPITAL EXPENDITURE BY $100 MILLION TO $500 MILLION, AND ALSO DIVEST SOME MORE ASSETS

* CO'S NORMALISED EARNINGS GUIDANCE FOR THE 2020 FINANCIAL YEAR REMAINS AT 15-25 CENTS PER SHARE

* EXPECTS THERE TO BE SEVERAL ONE-OFF ADJUSTMENTS THAT WILL IMPACT REPORTED EARNINGS IN FY20

* DOWNSIDE RISK TO PRICES REMAINS FROM WEAKENING YUAN, WHICH TENDS TO REDUCE CHINESE CONSUMER PURCHASING POWER FOR USD-PRICED DAIRY PRODUCTS

* ALL FIGURES ARE IN NZ$

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