Fonterra securities halted from trading as 2018 earnings under scrutiny

Thursday 9th August 2018

Fonterra Cooperative Group's 2018 earnings may differ from its previous guidance, the country's dominant dairy company said today. Its securities trading on the NZX and ASX have been halted while it crunches the numbers, with an update expected tomorrow.

In March, Fonterra posted a first-half net loss of $348 million due to a $405 million write down of its 18.8 percent investment in Chinese infant milk formula company Beingmate and a $183 million settlement with Danone following their dispute over the 2013 whey protein recall.

In May, the company cut its forecast dividend for the 2018 year to a range of 15-20 cents a share, from a previous forecast of 25-35 cents, while its normalised earning per share guidance was lowered to a range of 25-30 cents, as it warned rising global dairy prices were squeezing margins.

Today, the company requested its securities on the ASX and NZX be immediately halted from trading, saying it is currently preparing its 2018 annual financial statements for the 12 months to July 31. Units in the Fonterra Shareholders' Fund, which give investors exposure to Fonterra's earnings, last traded at $5.11 and have dropped 20 percent so far this year

"As a result of the work being undertaken there may be a variation from the earnings guidance previously given to the market," the company said. "Fonterra is working to determine whether this is the case and expects to be in a position to notify the market by the close of business on 10 August 2018. Accordingly, a trading halt has been requested to allow Fonterra to determine this and to make any required announcement to the market."

Newly minted Fonterra chair John Monaghan is presiding over today's board meeting after the company announced last month that John Wilson would be stepping down due to ill health. Monaghan, who has been a director on the board since 2008, has taken over at a time when Fonterra and outgoing chief executive Theo Spierings have faced criticism due to the poor performance of the cooperative's Beingmate investment and lacklustre earnings growth. Spierings announced in March that he would leave the position in the course of this year, and pressure had been mounting for Wilson to also step down.

(BusinessDesk)

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