Fonterra milks FY23 earnings amid wary market forecast

The news: New Zealand dairy giant Fonterra has doubled-down on its wary forecast of milk prices in 2024 and has unveiled a plan to reduce on-farm greenhouse gas emissions 30% by 2030.

The numbers: In its quarterly update, Fonterra forecasts the FY24 farmgate milk solids price to be around NZD7.25/kg, significantly lower than the NZD8.22/kg that led the co-op to boost profits 170% to NZD1.6 billion ($1.47 billion) in FY23. The group's improved balance sheet has provided room for its new Advance Rate Schedule, which gets cash to farmers sooner. FSF shares fell 0.7% in the first hour of trading to $2.85.

The context: Amid softer global demand, Fonterra said it would be introducing a target of 30% reduction in on-farm emissions to assist with retaining and growing partnerships, bringing it in line with many offshore competitors that have already set targets. Fonterra's pathway to the emissions target includes farming best practices, new technologies such as methane-buster Kowbucha, carbon removal and historical land-use changes.