Fonterra amends forecast earnings guidance for 2021

Fonterra says demand for New Zealand milk is strong despite Covid-19 impacts. Photo / file

Dairy cooperative Fonterra has lifted the bottom end of its 2021 forecast earnings guidance and narrowed the range to 25-35c per share, from 20-35c per share.

Chief executive Miles Hurrell said strong demand for Fonterra and New Zealand milk and a disciplined, committed approach by staff to improving performance has enabled the move despite the challenges of Covid-19.

While New Zealand's biggest company was still preparing its half-year accounts for release on March 17, it now had enough information to provide more clarity on its full-year earnings guidance, he said.

The narrower forecast earnings range still reflected the usual uncertainties faced over any given year.

Fonterra expected its earnings performance to be heavily weighted to the first half of the financial year.

A forecast farmgate milk price range of $6.90-$7.50 per kilogram of milksolids but great for farmers and the economy, but rising dairy prices in the first half of the year put pressure on Fonterra's sales margins, Hurrell said.

The effect would be seen through the second half of the year.

"We will continue to focus on what is within our control – that's staying on strategy and maintaining financial discipline. It's also about our teams going out every day in our markets around the world, proactively managing challenges in the global supply chain and delivering for our customers, farmer shareholders and unit holders."

Fonterra is the world's fifth biggest dairy company by revenue and has 10,000 farmer-shareholders. It also offers listed dividend-carrying, non-voting units in farmer shares to the public.