Investor Presentaiton
Conditions are improving for the dairy sector
•
Global dairy prices recovered sharply through H2 2016, and in
January were 50% higher than in the middle of last year.
Fundamentals have shifted in favour of dairy producers. The
previous period of low prices has led to milk supply contracting in
key dairy export regions, including Europe, New Zealand and
Australia. Demand, especially from China, has also improved.
Westpac Economics has upgraded our forecast for New Zealand's
farm gate milk price to $6.20 for the current season. However,
while this is a significant improvement, it will take some time for
farmers to repair their balance sheets following two seasons of
very low prices.
NZ export commodity price index (NZD)
Dairy payout and dividend
Kg Ms
$10
$9
$8
■Dividend
$7
■Milk price
$6
$5
$4
SSSSSSSS
Kg Ms
$10
Westpac forecast $9
$8
$7
$6
$5
$4
$3
$2
$1
$0
❁�8⌘¢#ཕ ྂ
2015/16
2016/17
2017/18
2010/11
2011/12
2012/13
2013/14
2014/15
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Source: Westpac Economics
Break-even dairy payout
Break Even Effective Payout
(including dividends)
Indexed to
Kg Ms
100 Jan 2000
250
$10
$9
200
$8
$7
150
$6
$5
100
$4
$3
50
$2
Dairy Products
Seafood
$1
0
$0
Jan-09
Jan-12
Jan-15
Indexed to
400
100 Jan 2000
350
300
250
200
150
100
50
Meat, Skins and Wool
Horticultural Products
0
Jan-00
Jan-03
Jan-06
Source: ANZ, Westpac
Kg Ms
$10
Fonterra payout including dividend Forecast
EA EA LA ES LA EA ES LA ES E
$9
$8
$7
$6
$5
$4
$3
$2
$1
$0
2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17
Source: RBNZ, DairyNZ, Westpac, Fonterra
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