Fonterra has increased its milk price forecast for the current season by 50 cents a kg and has laid out a 30 to 45 cents per share earnings forecast for the 2023 financial year.

The co-op has also outlined an organisational structure aimed at accelerating its long-term strategy and announced the departure of long-serving executive Kelvin Wickham after 34 years.

Fonterra lifted its 2022/23 milk price range to NZ$8.75-$10.25 per kg of milk solids, up from $8.25-$9.75 per kg.

This increases the midpoint of the range by 50 cents to $9.50 per kg.

Chief executive Miles Hurrell said the lift in the forecast milk price reflected the milk supply and demand picture and the current strong US dollar.

Hurrell said that the strong earnings guidance for next financial year reflected an expected recovery in some of the co-op's key markets which have experienced margin pressures this financial year, coupled with ongoing favourable Ingredients margins.

"The wide earnings range for 2022/23 reflects the current high level of uncertainty that comes with operating in a globally-traded, volatile market," he said.

"While the co-op is in the position to be forecasting both solid earnings and a healthy milk price for the next year, significant volatility remains.

"These near-term headwinds had the potential to impact on some of the co-op's targets."

Fonterra released its 2030 long-term aspirations in September last year.

"We're still on track for our 2030 financial targets, but the last few months have shown that there will be some bumps along the way," Hurrell said.

The co-op maintained its earnings guidance range of 25-35 cents per share for the current financial year, which ends on July 31.

Hurrell said a series of global events have changed some of the assumptions the co-op's aspirations were based on.

"In particular, interest rates and inflation have lifted well above our assumptions, as have commodity prices in response to the continued strong demand for dairy.

"These input cost increases are impacting the cost of our debt in the short term and have also pushed on-farm costs up."

This in combination with ongoing regulatory changes, would potentially reduce milk supply volumes.

"As the higher milk prices lift working capital, our overall debt position has the potential to trend higher but still within our current debt parameters.

"What happens beyond next year is considerably less certain, with a wide range of possible outcomes."

The co-op will provide earnings guidance for 2023/24 at the end of the 2022/23 financial year and at the same point going forward in future financial years.

Fonterra has been working through how to adapt its organisational structure to accelerate progress towards its long-term aspirations.

The co-op has two new management team (FMT) roles.

Komal Mistry-Mehta, who has been with the co-op since 20211, has been made chief innovation and brand officer.

Another new role, managing director strategy and optimisation, is yet to be filled.

Fonterra said the shape of its AMENA (Europe, Middle East & Africa, North Asia and the Americas) business is changing with the planned sales of its businesses in Chile and Brazil, the exit from Russia, and the active living business moving to the new Innovation and brand business unit.

"With this in mind, we are grouping AMENA and APAC (Asia Pacific) into a consolidated business unit to be led by Judith Swales," it said.
 
"Kelvin Wickham, chief executive of ur AMENA business, has decided that this juncture is the right time for him to step away from Fonterra as the next generation of leadership takes forward the co-op's long-term aspirations," the co-op said.