Fonterra slashes forecast milk price, again
Fonterra has slashed another 50c off its milk price forecast as global milk flows shows no sign of easing.
For year ending July 31, 2024, the co-op’s group income topped $497 million, with earnings available for payout of $184 million.
Overall earnings equated to $12.20/kgMS of shareholder supplied milksolids, before retentions for reinvestment. From this, Tatua confirmed a cash payout to shareholders of $10.50/kgMS and retained $1.70/kgMS , equivalent to $26 million before tax, for reinvestment in the business.
Fonterra has announced a final payout of $8.38/kgMS for last season – made up of $7.83/kgMS milk price and 55c dividend. Miraka has paid its suppliers $8 for last season’s milk, with some suppliers enjoying an extra 20c under its excellence programme. Synlait paid a base milk price is $7.83/kgMS for the 2023 / 2024 season. In addition, an average of $0.28 per kgMS was paid for incentives, taking the total average milk payment to $8.11/kgMS.
Tatua suppliers will receive over $2/kgMS more than other farmers in the country.
Tatua chairman Stephen Allen says the supply season had a challenging start, marked by a wet spring and limited sunshine hours which adversely affected pasture growth and quality, and therefore milk production.
Fortunately, the El Niño-induced drought that was forecast for later in the season didn’t eventuate, and instead, regular summer rainfall led to good late season pasture growth. This enabled production to be maintained, increasing full-season shareholder supply to 2.57% above the prior season.
Allen says normalisation of unprecedented high protein commodity prices of the prior year, in combination with prioritising available milksolids to value-add production, resulted in a substantial drop in revenue in its Bulk Ingredients division of caseinate, whey protein concentrate (WPC) and anhydrous milkfat (AMF).
“Pleasingly however, we were still able to achieve our second highest revenue ever, for what remains an important part of the business.
“The combined revenue from our more specialised Nutritionals, Foods, and Flavours divisions was our highest ever, reflecting our continued focus on developing these less commoditised product offerings.
“As usual when determining our payout, we have sought to balance the near-term needs of our shareholders’ farming businesses, with the requirement to continue investing for Tatua’s resilience and future prosperity.”
Tatua’s year-end gearing (debt divided by debt plus equity) increased to 23% from the prior year low of 16%, reflecting the funding impact of its current foods plant capacity expansion.
In addition to the sound financial result, good progress was made in many areas across the business, making for another very complete year, Allen points out.
“Along with our milk suppliers, our teams in New Zealand and our offshore subsidiaries have continued to demonstrate their capability and dedication to the business, contributing to everything that has been achieved.
“We extend our gratitude to our customers and all who have partnered with us and look forward to another productive year ahead.”
