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Matt Montgomerie: Forsyth Barr Senior Analyst on Fonterra raising its Farmgate Milk Price · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Fontira has lifted its forecast farm gate milk prices too,
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  Speaker 1: between nine to fifty to ten dollars fifty. The dairy
• 0:06
  Speaker 1: cooperative says it's seeing increasing demand from China and Southeast Asia.
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  Speaker 1: The move comes despite profits falling from three hundred and
• 0:13
  Speaker 1: forty six million to two hundred and sixty three million.
• 0:15
  Speaker 1: That's a thirty percent reduction on the same time last year.
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  Speaker 1: That's for quarter one. Matt Montgomery is the Forsyth Bars
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  Speaker 1: Senior analyst Equities is with us this morning. Matt, good morning,
• 0:24
  Speaker 1: Good morning, Ryan, thanks for having me. Had good great
• 0:27
  Speaker 1: result about the well if the result materializes about the
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  Speaker 1: forecast farm gate milk prices.
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  Speaker 2: Yeah, No, indeed, I think if you look at recent
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  Speaker 2: Glowood Dury trade octions have been strong and ten dollars
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  Speaker 2: would be a record high if you look at the
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  Speaker 2: midpoint in nominal terms. The previous high was nine dollars
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  Speaker 2: thirty back in twenty two. So yeah, father, how high?
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  Speaker 1: How much high could it potentially go? I mean I'm
• 0:55
  Speaker 1: reading that this is all about China, in particular stockpiling
• 0:59
  Speaker 1: ahead of Christmas learning New Year. Does it taper off
• 1:02
  Speaker 1: next year?
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  Speaker 2: Yeah? I mean, I'm reluctant to forecast that. I must say,
• 1:07
  Speaker 2: I mean commodity faster, the inherently qualatile, but the China
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  Speaker 2: demand has been fluggish for some time, so as pleased
• 1:18
  Speaker 2: and could least see that they're returning in some ways.
• 1:23
  Speaker 1: What about the profit for a quarter one miles house
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  Speaker 1: is that was a strong result despite the thirty percent reduction.
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  Speaker 2: Yeah, I think for Fontierra, you've got to consider that
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  Speaker 2: when milk prices are high like they are, and that
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  Speaker 2: often tends to mean that margins and their consumer and
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  Speaker 2: food service businesses are slightly well good than their inability
• 1:48
  Speaker 2: to pass the higher prices on. So they reiterated their
• 1:53
  Speaker 2: full year earnings guidance yesterday for forty to sixty cents
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  Speaker 2: this year. So I think that's the important thing to
• 1:59
  Speaker 2: consider where that's exactly what they had been signaling back
• 2:04
  Speaker 2: in September when they reported their results, So it shouldn't
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  Speaker 2: be any major surprises to invest it all funners.
• 2:12
  Speaker 1: They're also a business and transition, which is another thing
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  Speaker 1: that Harrell spoke about you spoke about yesterday.
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  Speaker 2: Yeah, No, there's there's been a lot of change in
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  Speaker 2: the corp for a number of years now. So Darla
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  Speaker 2: wouldn't say that it's reflective of thirty per client. It's
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  Speaker 2: more reflection of, hey, looks this is a volatile business
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  Speaker 2: and it's thanks move around on prices, and the last
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  Speaker 2: year was a very good year as well. I think
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  Speaker 2: that's important to consider too.
• 2:42
  Speaker 1: Matt, Thank you very much for that analysis. Really appreciated
• 2:45
  Speaker 1: this morning. Matt Montgomery for Scith bast Senior Analyst, Equities.
• 2:49
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• 2:52
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• 2:55
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