Recent storms have reduced Fonterra's milk flows, but they now expect earnings for the 2023 season to rise and to be at the top of their guidance for 2022

Fonterra has revised its forecast milk collections for the 2022/23 season down -1% from 1,510 million kgMS to 1,495 million kgMS and a retreat of 15 million kgMS for the season.

They say weather conditions experienced recently in some parts of the country are causing a slow start to the season, most recently the floods in the Far North and top part of the South Island.

They also announced it has revised its 2023 forecast earnings guidance to 45 to 60 cents per share, up from 30 to 45 cents per share.

Fonterra CEO Miles Hurrell says the lift in forecast earnings is a continuation of the ongoing strong demand for dairy that saw Fonterra confirm its FY22 earnings were at the top end of the guidance range.

“The demand signals we saw at the end of FY22 have continued driving improved prices and higher margins across our portfolio of non-reference products, particularly in cheese and our protein products such as casein.

“We see strong underlying demand and the latest lift in whole milk powder prices on GDT is also a positive signal reversing the recent easing in the prices that drive our Farmgate Milk Price. 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.

“This sustained period of favourable pricing relativities between our protein and cheese portfolios and whole milk powder is the main driver for the increase in the FY23 earnings guidance range being announced today. If these unprecedented conditions were to continue for a further extended period this could have an additional positive impact on forecast earnings.