Earnings fall as world’s largest dairy exporter cuts payout forecast

Fonterra Co-op, the world’s largest dairy exporter, has cut its forecast milk payout to New Zealand farmers and said full-year earnings plunged.

The Auckland-based company will pay its 10,500 farmer suppliers NZ$5.30 (€3.34) per kg of milk solids in the current season, down from a previous estimate of NZ$6 (€3.78). It raised its projected range for the 2014-15 dividend to 25c-35c a share from 20c-25c.

Dairy prices have slumped this year as China, Fonterra’s biggest customer, bought less in fortnightly auctions after earlier building up its milk-powder stocks. Rural spending may slow as the payout to farmers slumps by about NZ$5.4bn (€3.4bn) from the 2013-14 season, economists at Westpac Banking said.