Selling the iconic ice cream business Tip Top won’t end Fonterra’s financial woes, says broker Grant Williamson, of Hamilton Hindin Greene.
However, the co-op has lowered its forecast dividend to 20-30 cents/share, resulting in a forecast cash payout of $4.90 - $5.00/kgMS.
The co-op announced its half-year results in Auckland this morning; a 10c cent interim dividend was declared.
Fonterra chairman John Wilson says that given the results achieved in the first half of the year and the continued volatility in international prices, the co-op is holding its forecast milk payout.
Revenue for six months ending January 2015 reached $9.7 billion, down 14% over the same period last year.
Net profit after tax (NPAT) was $183 million, down 16%.
Wilson says the half-year results are below farmers' expectations "in a period when the Farmgate Milk Price is low and we are reducing the forecast dividend range."
"Our half-year results are a snapshot of tough conditions in dairy with variable production, demand and pricing," says Wilson.
"There was also the challenge of generating profit from inventory made in the previous financial year when the cost of milk was higher, but sold in the first quarter of the financial year when global dairy prices were falling.
"In New Zealand, milk production got off to an excellent start. A very dry summer in most regions curtailed production in the last three weeks of January, with the cooperative reducing its milk volume forecast to slightly below last season's production.
The co-op's current milk supply forecast for the 2014-15 season has increased to 1,551m kgMS, 2% per cent below the 2013-14 season.