INDEPENDENT NEWS

Fonterra expects FY loss of up to $675m

Published: Mon 12 Aug 2019 12:05 PM
Fonterra says it won't pay a dividend this year; expects FY loss of up to $675m
By Rebecca Howard
Aug. 12 (BusinessDesk) - Fonterra Cooperative Group said it expects to report a full-year loss of $590 million to $675 million and that it won't pay a dividend as it slashes the carrying value of assets around the world.
Chair John Monaghan said in light of the significant write-downs "we have made the call to not pay a dividend for FY19," for the year ending July 31. While the underlying performance is in line with the latest earnings guidance, "we cannot ignore the reported loss," he said.
Fonterra reported its first net loss attributable to shareholders of $221 million in the July 2018 year, and paid annual dividends of 10 cents per share.
Chief executive Miles Hurrell said after a full review of the business over the past year, "it has become clear that Fonterra needs to reduce the carrying value of several of its assets and take account of other one-off accounting adjustments, which total approximately $820 million to $860 million."
He said while the FY19 underlying earnings are within current guidance of 10-15 cents per share. However, "when you take into consideration these likely write-downs, we expect to make a reported loss of $590-$675 million this year, which is a 37 to 42 cent loss per share."
Units of the Fonterra Shareholders' Fund and the farmer-owned Fonterra shares both closed at $3.76 on Friday, and have dropped 19 percent so far this year.
Regarding the specific write-downs, Hurrell said DPA Brazil will be impaired by approximately $200 million due to economic conditions in Brazil. The carrying value of the China Farms will be impaired by approximately $200 million due to the slower than expected operating performance.
In the New Zealand consumer business, the combined impact of operational challenges and a slower than planned recovery in market share means a write-down of approximately $200 million. In Australia, a one-off impact of approximately $70 million includes the previously announced $50 million on the soon-to-be shuttered Dennington factory.
(BusinessDesk)
ends
BusinessDesk
Independent, Trustworthy New Zealand Business News
The Wellington-based BusinessDesk team provides a daily news feed for a serious business audience.
Contact BusinessDesk
Email:

Next in Business, Science, and Tech

Services lead GDP growth
By: Statistics New Zealand
Letter to Immigration Minister From Early Harvesting Growers
By: One Plus One
Scientists discover one of world’s oldest bird species
By: Canterbury Museum
Helping regions fill skills shortages and Kiwis come first
By: New Zealand Government
Report: Govt Inquiry into Auckland Fuel Supply Disruption
By: Inquiry into The Auckland Fuel Supply Disruption
NZ economy grows 0.5% in June quarter, beating expectations
By: BusinessDesk
Don’t blame President Trump for slowing economy
By: New Zealand National Party
Labour's big government economic policies continue to fail
By: ACT New Zealand
Kiwi economic growth slows. We need fiscal caffeination
By: Kiwibank
Weakening economic growth shows need for tax cuts
By: New Zealand Taxpayers' Union
Employers pen open letter to Minister in ‘desperation’
By: New Zealand National Party
Dismissive Minister out of touch with reality
By: ACT New Zealand
Labour issues in booming sector
By: Bayleys
Migrant Workers Association criticises work visa overhaul
By: RNZ
More detail needed on migrant worker policy
By: BusinessDesk
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media