Fonterra’s $3.2b capital return to farmers set to boost rural incomes and NZ economy
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
Fonterra is lowering its 2013 earnings before interests and taxes (EBIT), blaming the drought and its struggling Australian business.
The co-op says its EBIT for financial year ending July 31 2013 will be around $1 billion, below the prospective normalised EBIT of $1.079 billion stated in the Fonterra Shareholders Fund prospectus.
However, the co-op says its payout to farmer shareholders and investors holding share units won't be impacted.
Fonterra chief executive Theo Spierings says that although the financial year had not yet ended, the impact on EBIT of unprecedented volatility caused by the extreme drought in New Zealand earlier this year, and the acceleration of the reshaping of Fonterra's Australian business, was sufficiently clear for the cooperative to provide an update to the market today.
"In the first half of FY13 NZ Milk Products' (NZMP) delivered a strong performance on the back of price premiums, product mix, cost savings and productivity gains," he says.
"At the time of our interim result on 27 March 2013, we cautioned that the second half was likely to be more challenging.
"The drought has contributed to a 64% rise in whole milk powder prices on GlobalDairyTrade since early 2013, and this has had a temporary, but significant, negative impact on NZMP's margins.
"At the same time, our Australian business remains under pressure. Although a recovery plan is being implemented, it is in its early stages and will not counteract the impact on earnings of intense competition and the accelerated reshaping of our business. The reshape programme has resulted in a number of additional write-offs," he says.
The co-op confirmed that the FY13 forecast cash payout to farmer shareholders of $6.12/kgMS remains unchanged. In addition, the current earnings per share guidance range of 45 – 50 cents per share has been reconfirmed; although it is now likely to be at the lower end of this range. The prospective FY13 annual dividend per share of 32 cents remains the same.
Fonterra will provide a full update of its FY13 result on September 25.
A statement on Fonterra's FY14 forecast cash payout expectations (farmgate milk price and dividend per share) will be made following its scheduled board meeting next week.
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
New Zealand’s trade with the European Union has jumped $2 billion since a free trade deal entered into force in May last year.
The climate of uncertainty and market fragmentation that currently characterises the global economy suggests that many of the European agricultural machinery manufacturers will be looking for new markets.
Dignitaries from all walks of life – the governor general, politicians past and present, Maoridom- including the Maori Queen, church leaders, the primary sector and family and friends packed Our Lady of Kapiti’s Catholic church in Paraparaumu on Thursday October 23 to pay tribute to former prime Minister, Jim Bolger who died last week.
Agriculture and Forestry Minister, Todd McClay is encouraging farmers, growers, and foresters not to take unnecessary risks, asking that they heed weather warnings today.
With nearly two million underutilised dairy calves born annually and the beef price outlook strong, New Zealand’s opportunity to build a scalable dairy-beef system is now.

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