The Fonterra Co-operative Group Limited has confirmed it will pay part of its forecast final dividend earlier to help farmers during a time of extremely tight on-farm cash flows.
John Wilson, chair of Fonterra, said a solid performance during the nine months to April 30 in the current financial year has enabled the co-operative to declare the 10 cents per share dividend. Payment will be made on June 7, bringing dividend payments this year to 30 cents per share.
“While the milk supply and demand imbalance continues to impact global milk prices and our forecast Farmgate Milk Price, the business is delivering on strategy and has maintained the good performance levels seen in the first six months of the financial year,” Wilson said.
“The earlier payment meets our goal of getting cash to farmers earlier in winter when they need it, as we signalled at our interim results announcement. Our total forecast dividend is 40 cents per share for the year. We intend to declare another 10 cents per share dividend in August, subject to financial performance continuing to support the current forecast earnings per share range of 45 to 55 cents,” he added.
Wilson said their forecast New Zealand milk collection for the current season is 1,558 million kgMS, which is three per cent lower than last season.
According to Theo Spierings, the company’s chief executive, despite lower milk collections, ingredients gross margins improved to 16 per cent.
“We have continued to optimise our product mix by adjusting volumes away from reference products, such as whole milk powder, towards non-reference products, such as cheese and casein, to take advantage of the relative pricing,” Spierings said.
Spierings said a strong sales performance has resulted in ingredients inventory volumes being 11 per cent lower than the same period last year.
“Our determination to convert as much milk as possible into the highest-returning products has resulted in an additional 300m litres on a liquid milk equivalent (LME) basis going to consumer and foodservice products in the past nine months,” he said.
Spierings said the development of International Farming Ventures to provide access to locally-sourced high quality milk is progressing as planned.
“We retain our focus on reducing on-farm costs and good operating performance. Earnings continue to be impacted by the development phase of the business and by the low domestic milk price in China,” Spierings said.
Wilson said looking ahead to the final three months of Fonterra’s financial year, the Co-operative’s good operating performance was expected to continue.
“We are maintaining our earnings per share range of 45-55 cents, and our forecast total dividend of 40 cents per share,” he added.
The Fonterra Shareholders’ Fund unit holders will receive a part payment of the forecast final distribution of 10 cents per unit.
The record date for the early part payment of the final dividend and distribution is May 30, and the payment date is June 7.
