Fonterra sticks with stronger 2018 pay out

Fonterra has maintained its forecast for a stronger payout to its farmers for the 2018 season despite the recent decline in dairy prices on the GlobalDairyTrade platform.

In presentations for the annual shareholders’ meeting in Hawera on Thursday, the cooperative reiterated its forecast 2017/18 payout of $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents, making the forecast total available payout of $7.20 to $7.30. The final cash payout was $6.52 for the 2016/17 season for a 100 per cent share-backed farmer.

Chairman John Wilson said farmers enjoyed a good season in 2016/17 after two seasons of unusually low milk prices. Apart from that, the company presentations gave few specifics on the outlook.

Some analysts have been speculating the 2018 forecasts could be under pressure given the recent weakening in prices. Whole milk powder fell 0.5 per cent to $US3014 ($NZ4220) a tonne in the last GDT auction.

The presentations from chief executive Theo Spierings included bullet points for 2018 priorities that include “Deliver China and Beingmate partnership at full potential”, protecting Fonterra’s share of the New Zealand milk pool, revitalising the Anlene brand, increasing its share of the Australian milk pool and achieving “double-digit Foodservice diversified growth”.

Fonterra has faced criticism for its partnership with Beingmate, whose shares have fallen since the New Zealand company took a stake of just under 20 percent in 2014 to cement a deal targeting China’s infant formula market and sales of its Anmum products. In Australia, Fonterra competes with Murray Goulburn Cooperative, that country’s largest milk processor.

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