Westpac Financial Performance Update
14 |
Conditions remain challenging for dairy sector
•
Global dairy prices have fallen around 20% over the last year
Prices have been weighed down by lacklustre demand from China and
strong growth in global supply, especially out of Europe
Westpac expect the sustained period of lower prices will eventually
lead to slower growth in global milk supply. However, this is taking
some time. Westpac payout forecasts assume dairy prices remain
around current levels until late 2016 before gradually starting to
improve
While dairy prices remain in the doldrums, prices for some of New
Zealand's other agricultural commodity exports have been holding up
better. In particular horticulture, beef and wine sectors have been
doing well due to decent demand conditions in advanced economies
as well as a lower NZ dollar
Dairy payout and dividend¹
$10 Kg Ms
$8
$6
$4
EA LA LA 69
$2
$0
■Dividend
■Milk price
Kg Ms
$10
Westpac
forecast
$8
$6
- $4
$2
$0
NZ export commodity price index (NZD)
250
Indexed to
100 Jan 2000
Indexed to
$/KgMs
100 Jan 2000
250
$9
Source: Westpac Economics
Break-even dairy payout
Average Break-even effective payout
--Fonterra Payout (including dividends)
$/KgMs
Westpac $9
forecast
$8
$8
200
200
$7
$7
$6
$6
150
150
$5
$5
$4
$4
100
100
$3
$3
50
$2
$2
50
Meat, Skins and Wool
Horticultural Products
- Dairy Products
Seafood
50
$1
$1
0
0
$0
$0
Jan-00 Feb-02 Mar-04 Apr-06 May-08 Jun-10 Jul-12 Aug-14
Source: ANZ, Westpac
1 Westpac NZ Economics forecast (ex dividend), Fonterra forecast is $3.90/kg. 2 Seasons ended May.
2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16
Source: RBNZ, DairyNZ, Westpac, Fonterra
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