'They simply must do better' - farming group on Fonterra loss

  • 13/09/2018

There's been disappointment from many Fonterra suppliers and shareholders at the big loss posted by the dairy giant.

Fonterra announced an annual loss of $196 million for the 2018 financial year.

 Farming lobby group, Federated Farmers said the loss is 'a very disappointing result'.

"That's the first full-year loss in their 18-year history. From a $745 million profit last financial year to a $200 million loss - that's a big drop and they simply must do better." dairy chairperson Chris Lewis said.

"But I'm confident they'll turn things around." he said.

Mr Lewis said farmers and shareholders will be looking for the new chief executive and chairperson to hit the ground running.

"I hope those two have a new broom for the shop floor. Good communication will be key."

Meanwhile the Chairman of Fonterra's Shareholders' Council Duncan Coull is also disappointed.

"There's no denying that our farmers are unhappy with current performance, and this year's results," he said.

"The underlying result and its impact on earnings, dividend and carrying value is totally unacceptable and one that our farming families will not want to see repeated. 

Moving forward, it is imperative that our business builds confidence through achievable targets and at levels that support a higher carrying value of our farmers' investment." Mr Coull said.

He also noted the Co-op's NZ$20 billion revenue resulting from the very strong milk price.

"The New Zealand public needs to recognise that out of that $20 billion revenue, a good portion remains in the New Zealand economy. That's a real positive - no other New Zealand business delivers that," he said.

Despite the results announcement, the Fonterra Shareholders' Council says it remains firmly resolved that Fonterra as a strong co-op is the only model that will deliver a strong future.

The final farmgate price per kilogram of milk solids will be $6.69. The total cash payout for the year will be $6.79 per kilogram of milk solids.