increase font size
Fonterra Shareholders Fund chairman John Shewan (left) and former agriculture minister Nathan Guy.
Fonterra's unit trading scheme continued to bleed investors in the financial year ending July 2020.
Total institution holdings in Fonterra Shareholders Fund (FSF) declined from 15% to 13% and private wealth dropped from 7% to 5%.
There was also a reduction in offshore investors; New Zealanders now make up 86% of total investors, up 3% from last year. The number of Australian investors dipped 3%.
FSF chairman John Shewan says as Fonterra’s performance continues to improve, it will regain investor confidence. He says the FSF would like to see institutional and private wealth holdings grow.
Shewan says Fonterra’s two years of consecutive losses in 2017-18 and 2018-19 eroded investor confidence. Speaking at the fund’s annual meeting in Auckland last week, he noted that at the start of the 2020 financial year the unit price dipped into the low $3 territory.
This occurred mid-August 2019 as Fonterra advised the market there was going to be a number of write-downs, with an expected loss of $590-$675 million for the previous year.
The unit price recovered in late September 2019 when the co-operative announced the sale of its 50% share in DFE Pharma as part of a strategy review.
Shewan says during the last financial year the unit price broadly followed the NZX50 index, however, it held better than some other listed companies during Covid lockdowns.
The fund finished the financial year, August 1 2019 to July 31 2020, up 8% at $4.06/share, from $3.77 – slightly up relative to the NZX50 index, which had growth of 7% for the same period.
The unit price earlier this month stood at $4.40, an increase of 17% since the start of the 2020 financial year and an increase of 29% on the low point of $3.41 in mid-May.
The fund allows investors to invest in the performance of Fonterra by buying units, giving them economic rights only and no access to Fonterra shares.
For 12 months ending October 30, units on issue jumped 4 million to 106 million units on issue.
During the 12-month period, units issued peaked at 107 million units on issue at mid October 2020.
Shewan noted the increase was predominantly due to farmer share compliance activity.
When a farmer ceases to supply milk to Fonterra, they have three years to reduce their holding in Fonterra shares.
He says in recent times a number of ceased farmers, instead of exiting Fonterra completely, have opted to sell their shares and buy units simultaneously – effectively transferring their Fonterra shares to units.
“There is a significant portion of retired farmers that no longer supply Fonterra milk who are classified as retail holders in the fund, and it is this group who made up a notable portion of the 4% point increase in retail holdings this year.”
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.
OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.
Fonterra has delivered a fifth straight year of record organic milk price for farmer suppliers.
Fonterra says favourable weather conditions supporting pasture growth is boosting milk production.
Like many manufacturers around the world, European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. But they are heading to the world’s largest agricultural machinery event in Hanover next month with a degree of cautious optimism.
Established in 2021, the John Deere Technician of the Year Awards champion the important contribution parts and service technicians make to the Australian and New Zealand agriculture, construction and forestry industries.
Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.
New Zealand is closer to eradicating bovine TB than ever before, but possums remain a threat, says Beef + Lamb New Zealand.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
The ACT Party says media reports that global dairy giant Nestle has withdrawn from the Dairy Methane Action Alliance shows why New Zealand needs to rethink its approach to climate.
OPINION: Ageing lefty Chris Trotter reckons that the decision to delay recognition of Palestinian statehood is more than just a fit…
OPINION: A mate of yours truly recently met someone at a BBQ who works at a big consulting firm who spent…
