AAP Finance

Fonterra faces China pain as virus spreads

By AAP Newswire

Dairy operator Fonterra has warned the coronavirus outbreak could disrupt the flow of its products to China, where many restaurants have closed.

Fonterra on Friday said the virus could affect China imports from January, where its whole and skim milk powder have been increasingly popular.

The NZ dairy giant had already lowered its forecast milk collection for the 2020 fiscal year to 1,515 million kilograms of milk solids, citing challenging weather conditions.

However there is no change to its full-year forecast earnings range of 15 to 25 NZ cents per share.

Chief executive Miles Hurrell said Fonterra had already contracted a high percentage of its milk supply for the financial year, which was helping to manage the virus impact.

He said the processing of containers had slowed at Chinese ports, and staff were carefully managing the flow of its products to avoid congestion.

Those Fonterra customers in China who sell to cafes and restaurants have suffered major impact, Hurrell said.

The dairy operator's imports to China grew by 11 per cent, or 318,219 megatonnes, for the 12 months to December 31.

The virus, which was first detected in Wuhan in China, has killed 2,747 people. Of these deaths, 57 have been outside China.

Many cafes and restaurants there have closed as people are reluctant to go outside.

Meanwhile, Fonterra's milk exports from Australia fell 9.5 per cent in December on account of bushfires.

Fonterra is due to issue its half year result on March 18.