It has been reported in international press agencies this morning that New Zealand dairy co-operative Fonterra has forecast a downgrade in profits this financial year.

Fonterra’s blaming the drought in New Zealand, and the cost of restructuring dairy operations in Australia for the $70m fall in full-year earnings, since it reported in the Shareholder Fund Prospectus.

The dairy company, one of the world’s largest, is now expecting full year profits at $873m in earnings before interest and tax.

The drought forced whole milk powder prices to rise by 64 per cent.

“At the same time, our Australian business remains under pressure,” Fonterra chief executive Theo Spierings said.

“Although a recovery plan is being implemented, it is in its early stages and will not counteract the impact on earnings of intense competition and the accelerated reshaping of our business. The reshape programme has resulted in a number of additional write-offs.”

He said the revised down figure is still subject to a volatile market and may be revised further.