(Bloomberg) -- Fonterra Cooperative Group, the world’s biggest dairy exporter, raised its earnings forecast for the second time in three months after a strong first quarter driven by demand for protein products. 

The Auckland-based company now sees normalized earnings in the year though July 2023 of 50 to 70 New Zealand cents a share, up from the previous projection of 45 to 60 cents, it said in a statement Thursday. In September, it upgraded its outlook from 30 to 45 cents.

Fonterra has faced a sustained decline in the price of its core product, whole milk powder, and has lowered the forecast for the milk price that it pays its farmers to reflect that. Still, demand for proteins such as casein and products used in medical nutrition have driven strong earnings in other parts of its business.

“The sustained strong margins in our protein portfolio give us the confidence to upgrade our earnings guidance, although the wider range reflects the volatility in the market which we expect to continue in the short to medium term,” said Chief Executive Officer Miles Hurrell. “If these conditions continue for a further extended period, it could have an additional positive impact on forecast earnings.”

Group normalized earnings before interest and tax in the three months through October rose 94% to NZ$368 million ($234 million) after revenue gained 32%, the company reported. Normalized earnings rose to 13 cents a share in the quarter.

Fonterra said milk supply is lower globally but so is demand, and this is reflected in a narrower forecast range for its farmgate milk price of NZ$8.50 to NZ$9.50 per kilogram of milksolids. The range midpoint fell to NZ$9.00 from NZ$9.25.

“Global market volatility has prompted some softening of demand for whole milk powder, particularly in Greater China and this is reflected in our forecast farmgate milk price range,” said Hurrell. “We’ve seen increased participation from other regions which has offset in part the drop in demand from Greater China. While it’s still early in the financial year, we are happy with our sales contract rate.”

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