Fonterra shaves 50c off forecast milk price
Fonterra has dropped its forecast milk price mid-point by 50c as a surge in global milk production is putting downward pressure on commodity prices.
Chief executive Miles Hurrell says he is pleased with the progress the co-op has made in the first quarter- from August to October 2020. The co-op has continued to make progress on implementing its strategy.
“Despite ongoing market disruptions from COVID-19, we are continuing to build on the momentum achieved in the last financial year,” he says.
Sales volumes are in line with the same period last year, which was before the full impact of COVID-19.
“This reflects strong demand for dairy and careful management of our supply chain,’ says Hurrell.
“We’ve seen improvements right across our business, which has resulted in a 40% increase in our normalised earnings. There’s been a couple of exceptions to this – Europe, which has been impacted by higher costs, and Africa, which has been impacted by lower volumes as we have shifted product to meet strong demand across Asia.”
Fonterra’s Greater China Foodservice business has been the stand-out performer: demand for dairy in China continued to recover strongly from COVID-19.
The co-op expanded its foodservice business into another 13 cities in China, bringing the total number of cities it operates in to more than 360.
“And our teams are helping to drive demand by continuously releasing new innovative ways of using our products in local cuisine as they pursue the next big food trend in China,” says Hurrell.
Demand in the Southeast Asia (SEA) Consumer business has improved year-on-year, while the SEA Foodservice business has started to recover as COVID-19 restrictions eased in some markets.
