New Zealand dairy giant Fonterra last week issued a profit warning to its farmer shareholders and said it was cutting its earnings per share (EPS) guidance to between 15c and 25c per share. Before Christmas, Fonterra issued an earnings guidance of 25c to 35c per share.

Fonterra blamed a trio of challenges facing the co-op for the profit warning, including difficulties in its Australian ingredients business, weak sales in Latin America, as well as rising milk prices, which are hurting profit margins. Miles Hurrell, who was permanently appointed as Fonterra CEO this week, said the co-op would remain financially disciplined.

“We are making good progress on our portfolio review and asset divestments in order to reduce our debt by $800m (€480m) this financial year,” said Hurrell.

Fonterra also announced it was raising its forecast milk price for the 2018/19 milking season to a new range of $6.30 to $6.60/kg of milk solids (26c/l to 27.2c/l). The previous milk price forecast ranged from $6/kg to $6.30/kg of milk solids (24.8c/l to 26c/l).