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At last week's annual meeting, Fonterra chair Peter McBride revealed that any amount of any capital return would be determined by the divestment of assets as well as the co-op's financial position.
Fonterra is signalling to farmers that it may not meet its earlier pledge to return $1 billion to shareholders and unit holders within two years.
Speaking at Fonterra's annual meeting last week, chair Peter McBride revealed that any amount of any capital return will be determined by the successful divestment of assets, as well as the co-op's financial position at the time.
As part of its strategy to 2030, Fonterra set a goal of a return of about $1 billion to shareholders and unit holders from divestments, including Chilean business Soprole and a stake in the Australian business.
But after looking at options, Fonterra has decided to maintain full ownership of the Australian business.
Part of the 2030 strategy includes pumping $1 billion each into sustainability and moving milk into higher milk products.
McBride says the co-op is still committed to investment targets for sustainability, higher-value products and R&D.
However, he points out that return to shareholders and unit holders had anticipated divestments including Soprole and a stake in the Australian business.
"Even thoughwe have since decided not to sell a stake in our Australian business, we are still committed to targeting a significant capital return to our shareholders and unit holders.
"We need to be mindful that we retain the asset in Australia, and the earnings associated with it. The amount of any capital return will be determined by the successful completion of the divestment programme as well as the co-op's financial position at the time."
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
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