Tuesday, 29 March 2016 13:55

Earlier dividend not signalling things to come

Written by 
Fonterra chairman John Wilson. Fonterra chairman John Wilson.

Fonterra chairman John Wilson says farmers are very grateful to the co-op for bringing forward dividend payments.

The co-op plans to make payments in April, May and August, with the two latter payments subject to final approvals at the time; the early payments are designed to ease cash flows on farm.

Fonterra usually pays dividends in April and October, and the change this year does not signal a long-term change to that normal practice.

Wilson says farmers have been in touch after the announcement expressing their gratitude.

"They are happy we are trying to put money back to our farmers," he told Dairy News.

Wilson says the forecast total dividend for the current financial year is 40c/share.

The board last week declared a 20c interim dividend to be paid in April.

"We intend declaring the remaining 20c/share in two dividends of 10 cents in May and 10 cents in August," Wilson says.

"The timing of these payments will help farmers' cashflows at the time of the season when they need it most; it is a specific response to the challenging financial conditions our farmers are facing."

May to August are typically the most difficult financially for farmers, with lower forecast milk payments in these months, he says.

"We looked carefully at the support options available to us and bringing forward payment of the total forecast dividend is the best way we can support our farmers while continuing to retain the financial strength of Fonterra."

The two dividends in May and August are still subject to the board's approval at the time. They are also subject to Fonterra's financial performance continuing to support its forecast earnings per share of not less than the current 45-55 cents forecast range per share.

The payments do not signal any intention to move away from Fonterra's normal practice of twice-yearly dividends paid in April and October. They are also consistent with Fonterra's dividend policy.

"We are firmly on track to achieve our forecast earnings of 45-55c/share, ahead of the 40-50c/share we indicated at the beginning of the season," says Wilson.

"We are backing ourselves to support our farmers and confirmation of the first payment will be made in May."

Wilson says they had considered an extension to the support loan provided early in the season which will total $383 million by April 2016.

But based on the solid performance of the cooperative in the first half it felt paying the final dividend earlier was the better option.

"This approach is directly related to the solid performance being achieved by the business."

Fonterra will also continue to competitively price stock in its Farm Source stores and pass on discounts secured on necessities such as fuel and power.

More like this

Fonterra sticking to $10/kgMS milk price

Fonterra has reaffirmed a forecast milk price mid-point of $10/kgMS for its farmer shareholders, with just over two months of the 2024-25 season left to run.

Featured

Pāmu farm opens gate to urban visitors

For many urban New Zealanders, stepping into Pāmu’s Pinta dairy farm near Taupo last month was the first time they had had the chance to experience farm life up close.

National

Machinery & Products

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

Data crucial to managing water

Watermetrics was formed as a water data collector and currently supplies and services modern technology such as flow meters, soil…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter