(Adds details on turnaround plan, CEO quote)
Oct 22 (Reuters) - The world’s biggest dairy exporter Fonterra on Tuesday increased the 2019-2020 guidance range for the price it pays farmers to procure milk, saying it has managed to achieve firm prices for its milk so far this year.
Fonterra raised its 2019-2020 forecast farmgate milk price to between NZ$6.55 and NZ$7.55 per kilogram of milk solids (kgMS) from between NZ$6.25 and NZ$7.25 per kgMS it had earlier forecast.
“Demand for whole milk powder (WMP) has been firm, and for the full season we’re expecting it to be above last year,” Chairman John Monaghan said in a statement.
The hike in guidance comes just a month after the company announced a highly awaited turnaround plan, where it put an end to ill-fated overseas expansion plans and pledged to focus on domestic milk production.
The dairy giant had faced criticism from the 10,000 plus farmers who make up its cooperative, as its foray into countries like China and value-added consumer products smashed its profits and pummeled shares to record lows.
Chief Executive Officer Miles Hurrell, who was appointed earlier this year and oversaw much of the recent overhaul in strategy, on Tuesday said there were positive signals for milk prices.
“The mid-point of the revised range does mean our teams will need to continue to push hard to achieve our margins, but so far we’re comfortable with how this season is shaping up in terms of underlying business performance,” he said.
Reporting by Rashmi Ashok in Bengaluru Editing by Chris Reese and Lisa Shumaker