Fonterra holds forecast payout drops dividend UPDATE – Synlait increases forecast

Fonterra is maintaining its forecast milk payout for the current season but is dropping the proposed dividend.

In a newsletter to shareholders, chair John Wilson said:

  • We are holding the forecast Farmgate Milk Price at $4.70 per kgMS.
  • However, we are lowering our forecast dividend to 20-30 cents per share, resulting in a forecast Cash Payout of $4.90 – $5.00.
  • The Board has declared a 10 cent interim dividend to be paid on April 20 (the record date is April 10).
  • The half-year results will be below your expectations, in a period when the Milk Price is low and the forecast dividend range is being reduced.
  • The results are due to tough conditions in dairy globally, with volatility in production and pricing, and further impacts of inventory valuation realities after our record Milk Price last year. . .

 

  • In summary, the results:
    • Forecast Cash Payout for the 2014/15 season, maintained at $4.90 – $5.00
      • Forecast Farmgate Milk Price $4.70 per kgMS
      • Estimated full year dividend of 20-30 cents per share
    • Revenue $9.7 billion, down 14 per cent
    • Normalised EBIT $376 million, down 7 per cent
    • Net profit after tax (NPAT) $183 million, down 16 per cent
    • Interim dividend of 10 cents per share.

Farmers will be relieved the milk payout is not being reduced.

UPDATE:

Synlait has increased its forecast milk price.

Synlait Milk has increased its forecast of the market milk price for the FY2015 season from $4.40 per kgMS to a range of $4.50 – $4.70 per kgMS.

“The market has recovered faster than expected, but recent volatility has shown us it still remains fragile,” said John Penno, Managing Director.

Mr Penno also acknowledged how financially difficult the current season is for suppliers and says this increased forecast market milk price range will be well received.

“Cash flows are incredibly important for our suppliers, particularly as they head into winter. We indicated in February that our next update would be in May, but given current market conditions, I’m pleased we can provide one now”.

Mr Penno added that this update will enable Synlait suppliers to manage their finances with more certainty and a corresponding increase in advance rates will further support this.

“We believe the market will continue to recover in the medium term as consumption expands and production growth slows in response to lower pricing. However, we remain mindful of the additional milk growth likely to come from Europe as milk production quotas are removed on April 1”.

“We will continue to keep an eye on the market and expect to update our forecast market milk price towards the end of May 2015”.

 

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