Fonterra Cooperative Group expects demand for protein products to stay strong through the second half of its financial year, particularly as the China consumers renew their appetite for dairy, according to Judith Swales, chief executive of global markets.
arlier Thursday, the world's biggest dairy exporter reported a 50% jump in first-half net income and raised its full-year earnings outlook, saying demand for proteins such as casein and products used in medical nutrition have driven strong earnings.
"The forecast currently for the protein category in particular remains strong and we've seen China come back in over the last couple of months," Swales told Bloomberg Television. "We expect that that will help to keep prices high."
While the company has a range of geographical markets to switch between, it is happy to see China demand returning, she said.
China "has all the hallmarks of a great outlook in terms of that growing middle class and an increased health focus post Covid," she said.
Swales estimated as much as 30% more milk was being diverted into higher-margin protein products than in a normal year.
"The fact that we have the broad play allows us to kind of maximize value and to move product out of powders into protein, particularly into caseins and caseinates where we've been able to command higher margins," she said. That has also encouraged management to increase full-year earnings projections.
Still, "we are living in a very volatile world," she added.
Bloomberg.
