WELLINGTON (Reuters) - New Zealand’s Fonterra (FSF.NZ) (FCG.NZ) on Friday sought more time to finalize its annual results, adding to uncertainty around the dairy giant’s outlook after it took massive write-downs and forecasted its worst-ever loss.
The world’s biggest dairy exporter is under the scrutiny of New Zealand’s financial regulator after it shocked markets last month with a write-down of up to NZ$860 million ($550 million) for its assets in Brazil, Venezuela, China and other countries, and said it was on track to post an annual loss of as much as NZ$675 million. It also said it would not pay a dividend this year.
Fonterra was set to report results on Sept. 12, but said because of the number of write-downs, its auditor, PricewaterhouseCoopers, needed more time to audit the financial statements.
It gave no new date for the results, but said it would report no later than Sept. 30.
It also maintained a full-year loss forecast of about NZ$590 million to NZ$675 million.
Fonterra’s shares have tumbled by more than 31% this year, hurt also by falling dairy prices, and were down 0.6% on Friday.
“Wait creates uncertainty,” said ANZ Bank agriculture analyst Susan Kilsby.
“There is no uncertainty around the milk price to farmers and no dividend being paid, as those have been announced. But there is uncertainty around Fonterra’s strategy going forward,” said Kilsby.
The earnings were expected to provide more clarity on the exact levels of the write-downs to date, and guidance on Fonterra’s future strategy.
In a tweet following the announcement, Fonterra’s team said nothing unusual had led to the change of date, but the normal auditing process was taking longer than expected.
“It also does not affect the Co-operative’s ability in any way to operate and pay its bills, including paying farmers for their milk,” Fonterra said in a statement announcing the delay.
Industry experts and analysts think Fonterra may need to write down more assets.
Earlier this week, the Financial Markets Authority sought information from Fonterra after receiving a complaint about the write-downs.
Fonterra has maintained that the write-downs were in line with market disclosure obligations, and that its financial statements were independently audited.
“The change in reporting date is unrelated to any discussions with the Financial Markets Authority, recent speculation about further material asset impairments, or other announcements,” Fonterra said in its statement to the market on Friday.
Losses in the 2018 financial year prompted Fonterra to begin a global review to assess how each of its assets and joint ventures supported the company’s strategy and if they were hitting their targets for return on capital.
Fonterra scrapped bonuses and froze the pay of about 7,000 employees, according to an internal email to staff seen by Reuters.
Reporting by Praveen Menon in Wellington and Nikhil Kurian Nainan in Bengaluru; Editing by Peter Cooney and Rosalba O'Brien