Interim chief executive Miles Hurrell said the co-operative must issue more accurate forecasts, including the potential opportunities as well as the risks.
“We will also be clear on our assumptions so farmers and unit holders know exactly where they stand and can make decisions that are right for them and their businesses.”
The forecast earnings guidance is 25-35c a share and unit and the milk price prediction has been left unchanged at $6.75/kg, following the 25c reduction announced two weeks ago.
The big ingredients division is forecast to make earnings before interest and tax of $850-$950 million. The value-add consumer and food service division forecast is $540-$590m.
Neither forecast is ambitious but more a restatement of the earnings results of the previous two financial years.
That underscores how difficult it is for Fonterra to boost its earnings, profits and dividends while at the same time paying farmgate milk prices above $6/kg.
Hurrell, chairman John Monaghan and chief financial officer Marc Rivers promised a new realism in forecasting and more comprehensive reporting of results.
Rivers said giving more detail is part of regaining credibility.
Fonterra will do a number of things differently to recover from its very disappointing and unacceptable $196 million loss.
It will re-evaluate all investments, major assets and partnerships to ensure they still meet its needs.
First is a strategic review of the Beingmate investment and nothing will be ruled out, including a possible sale of its stake, Monaghan said.
Anmum distribution in China is no longer exclusive to Beingmate but its new chief executive Bao Xiufei is having positive effects and is collaborative.
Fonterra has to get the basics right and fix its businesses that are not performing, Hurrell said.
“The level of financial discipline will be lifted throughout the co-operative so that debt can be reduced and return on capital improved.”
Fonterra has forecast a 1.3% increase in its milk collection this season, being 1525m kilos compared with 1505m last financial year, which was the lowest volume in five years.
It does not expect any increase in the peak daily collection, at 81m litres in late October, well below its full processing capacity of 95m.
Last season’s milk price of $6.69 contained the following weighting components: whole milk powder 64%, up 8%, skim milk powder 20%, down 11%, butter 9%, up 32%, anhydrous milk fat 5%, up 28% and butter milk powder 2%, down 7%.
Fonterra said China’s imports rose 17% in the past year and the Middle East and Africa were up 5%.
European Union milk supply had risen 3%, the United States 1%, Australia 3% and Fonterra was down 1%.
