Word of the day

September 22, 2011

Varevare – to be very young and still quite hopeless.

Brave Blossoms bow to Tonga

September 22, 2011

Tonga’s  31-18 win against Japan broke a five match losing streak for Tonga and put the Blossoms (I do like that name) out of the tournament.

Tonight South Africa meets Namibia in Auckland and with a lot more hope than expectation I’m backing Namibia.


September 22, 2011

6/10 in the Herald’s changing world quiz.

Thursday’s quiz

September 22, 2011

1. Who said: “Auto racing, bull fighting and mountian climbing are the only real sports  . . .  all others are games.”

2. It’s courir  in French, correre in Italian,  correr in Spanish, and rere  or oma  in Maori, what is it in English?

3. What are the capital cities of  Namibia and Georgia (the country not the state) ?

4. What the common name for  Narcissus?

5. Whose face is on the New Zealand $10 note?

Fonterra: record results highest payout

September 22, 2011

Fonterra has announced record financial results for 2011 and its highest payout of $8.25 before retentions.

The payout comprises a farm gate milk price of $7.60 per kilo of milk solids and a distributable profit of 65 cents a share.

The payout before retentions is $1.55 higher than the previous season’s $6.70 and better than the previous record of $7.90 in 2008.  The cash payout of $7.90 is also a record and is $1.53 higher than the prior period’s $6.37. 

Other highlights:

  • A 13 per cent increase in after tax profit to $771 million for the year ended 31 July 2011.
  • A 19 per cent increase in revenue to $19.9 billion, a new record for Fonterra.
  • The annual Dividend is being increased to 30 cents per share, a 3 cents per share or 11 per cent increase on last year’s 27 cents per share. Dividends are paid out of Distributable Profit.
  • Fonterra’s balance sheet is in its strongest shape ever, with an economic gearing ratio of 41.8 per cent, compared with 44.9 per cent a year earlier.
  • Fonterra collected a record 1,346 million kgMS of raw milk in the 2011 season, 5 per cent higher than the prior season.
  • Dairy exports for the year totalled 2.1 million tonnes, another record for Fonterra.

A media release form the company says:

The results reflect an improved performance by Fonterra’s ingredients businesses that export to more than 100 markets as well as by overseas consumer businesses, especially across Asia and the Middle East. However, consumer business profits in New Zealand and Australia were down in a tough market environment.

Chairman Sir Henry van der Heyden said the record financial performance and record milk production meant Fonterra would distribute milk payments and dividends totalling $10.6 billion – $2.4 billion more than in 2010 and $1.5 billion more than Fonterra’s previous best year in 2008.

“As Fonterra is a Co-operative that is 100 per cent owned and controlled by New Zealand farmers, that money flows right back into the local economy as farmers reinvest in their businesses and buy more farm supplies and equipment.

“An independent report by the New Zealand Institute of Economic Research (NZIER) last December found that the benefits of a higher Fonterra Payout extend well beyond farmers, as they spend around 50 cents out of every dollar earned on locally produced goods and services.”

Sir Henry said the record Farmgate Milk Price of $7.60 per kgMS was well up on the prior season’s $6.10 per kgMS and reflected the recent strength of world dairy markets, with prices in some categories reaching or nearing historical highs during the past year.  In addition, Fonterra’s hedging policy shielded farmers from the full brunt of a stronger New Zealand dollar, especially over the latter stages of the year.

“We also benefited from record milk production, as some of the best autumn conditions in recent years offset poor weather in many regions earlier in the season.”

Sir Henry said the 2011 Farmgate Milk Price as calculated in accordance with the Farmgate Milk Price Manual is $7.60 per kgMS. The average amount available to pay for share-backed supply is $7.59 per kgMS, after adjusting for winter milk premiums and contract milk discounts.

He said the dividend of 30 cents per share equated to 69 per cent of adjusted Distributable Profit, which was consistent with the Board’s policy to distribute 65-75 per cent of profit after adjusting for one-off items and other factors.

Fonterra CEO Andrew Ferrier said Fonterra achieved a 13 per cent increase in net profit after tax, to $771 million, even after paying farmer shareholders 29 per cent more for the milk they supplied. 

“Although the business was impacted by higher dairy ingredient prices and a fragile global economy, our underlying profitability showed solid growth over last year due to improvements within our ingredients businesses and the strength of our consumer brands.”

Normalised earnings from Fonterra’s Standard & Premium Ingredients segment were 36 per cent higher than the previous year. As segment earnings are dependent on selling a mix of products at average prices above the cost of milk, this was an encouraging result in the face of a much higher Farmgate Milk Price, Mr Ferrier commented. Earnings growth reflected improved efficiencies in the manufacturing and supply chain, refinements to the product mix and growth in the higher-margin premium ingredients business.

Revenue from the consumer businesses hit a new record of $6.1 billion. However, the consumer businesses faced a challenging year as margins came under pressure from the rise in commodity prices.

Mr Ferrier said the standout consumer business segment was Asia/Africa, Middle East, with normalised earnings rising 12 per cent.  “We continue to focus on high quality nutritional and foodservice solutions that leverage our trio of power brands, Anchor, Anlene and Anmum.”

 This result is welcome news for farmers and the wider economy however, the current season is not expected to be as good.

The board confirmed its forecasts for the current 2012 season and 2012 financial year of  $6.75 per kgMS and the forecast distributable profit range is 40-50 cents per share. 

That reflects a softening of global commodity prices since early this year and confirms the wisdom of farmers who have used profits from the past season to reduce debt.

Sir Henry said it was fitting that the record result was achieved as Fonterra marked its 10th anniversary: 

 “Ten years ago, the New Zealand dairy industry came together to form a national champion in Fonterra. Our collective vision was to create a business with the scale to become a world leader in dairy ingredients and maximise dairying’s contribution to the New Zealand economy.  That’s exactly what Fonterra is doing.”

We can all be grateful that the company is succeeding in its aim and also for the work Fonterra and successive governments have done in opening up new markets in Asia, the Middle East and Latin America.

More taxes threaten jobs

September 22, 2011

The Green Party’s aim to create 100,000 new “green’ jobs sounds fine but the policy doesn’t live up to the promise.

Rather than creating jobs, they’re planning to create new and increase existing taxes which will have the opposite effect.

But Associate Finance Minister Steven Joyce said the Greens were actually proposing seven new taxes or increased taxes, that would cost $8 billion.

“The reality is this would be a job destruction package and the extra taxpayer-subsidised jobs wouldn’t begin to cover for the jobs lost,” he said.

Governments don’t create jobs and the more they take from businesses and individuals the less those enterprises and people have to spend on things which could increase employment opportunities.

It takes a growing economy to increase jobs and to look after the environment.

 We won’t get either through policies which take more money from people,  filter it through a bureaucracy and give what’s left away.

Parties can’t be blamed for rogue candidates

September 22, 2011

Elections have become presidentail with the focus of national media on party leaders.

That means if an MP or candidate is making nation-wide headlines it’s usually for all the wrong reasons.

So it is with the story of the Green Party candidate Max Dil­lon Coyle whose partner, Melissa Campbell , did a life’s-tough-for-the-poor interview without disclosing her relationship to the Waikato Times.

This is very different from the story of a woman of independent views and political affiliations who was stupidly, and wrongly, labelled a Labour wife.

From the information available, Ms Campbell was acting politically and deliberately with her partner’s knowledge and approval.

Whaleoil broke the story and the following day followed up with the clarification published by the Times.  

The paper says the reporter asked Ms Campbell about any links to the Greens and she denied having any.

I can understand a reporter who asked a direct question and got a clear denial not looking any further for links with the party. But the story talked about Max without a surname. Even if it’s the paper’s style not to print partners’ full names in stories like this she ought to have asked for it. Even if she hadn’t, in the not too distant past someone between the reporter and publication would almost certainly have known enough about local political candidates to wonder and ask some more questions.

That is an indictment on modern media where there’s little if any institutional knowledge and fewer people with less time to fact-check.

But that is a side issue. The main story is the way a candidate used his partner to manipulate the media for political ends allowed the media to be manipulated by his partner for political ends.

He has now apologised for his error of judgement.

The Greens have been embarrassed by this, but in their defence there is very little a party can do about rogue candidates.

They can do their best to ensure the candidates they select have integrity; they can explain the rules and responsibilities; they can provide advisors and mentors.

But if an inexperienced candidate gets carried away with his or her own enthusiasm and doesn’t consult someone in the party before acting on it, it is ultimately the candidate’s fault not the party’s.

If however, he is playing an important role in the party’s campaign and has a history of attempting to manufacture news the party needs to take some responsibility for his actions.

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