Fonterra has announced an increase in the forecast milk payout:
Fonterra Co-operative Group Limited today increased its forecast Farmgate Milk Price for the 2017/18 season to $6.55 per kgMS and announced a full year forecast dividend range of 25 – 35 cents per share with an interim dividend of 10 cents per share.
Chairman John Wilson says the ongoing strong global demand for dairy and stable global supply are continuing to support global prices, particularly for the important Whole Milk Powder category.
“Farmers will welcome a forecast cash payout of $6.80 – $6.90, which would be the third highest in the last decade. This is also good news for New Zealand as it represents around $10 billion flowing into the country’s economy. However, we are very aware of the challenges many of our farmers are facing this season with difficult weather conditions impacting production.
“While the global supply and demand picture remains positive and we expect prices to stay around current levels, we will be watching for any impact on market sentiment as spring production volumes build in Europe,” he added.
New from China isn’t all good though.
Fonterra’s Greater China business continues to perform well overall but the Co-operative has re- assessed the value of its Beingmate investment so that it reflects a fair value at this point in time.
Commenting on this decision, Mr Wilson says the Board has assessed the carrying value of Beingmate at $244 million and therefore taken an impairment of $405 million. . .
Synlait Milk has reported a half year net profit after tax (NPAT) of $40.7 million for the six months ending 31 January 2018.
This is compared to $10.6 million for the same period last year (H1 FY17).
Synlait’s Managing Director and CEO, John Penno, says the strong earnings growth of $30.1 million has been driven by increases in manufacture and sales of our highest margin products, as well as improved margins and earlier sales of our ingredients products.
“The growth trajectory of canned infant formula has continued with total consumer packaged volumes almost tripling from the same period last year and up 36% on the second half of last year,” he says.
“Our relationship with The a2 Milk Company™ continues to strengthen where we remain their exclusive manufacturer for the important Australia, New Zealand and China market.”
“We have also renegotiated our supply agreements with New Hope Nutritionals and with Bright Dairy, which provides for four-fold volume growth over a five-year period. However, we don’t expect this to impact sales until FY19,” he says.
In the six months to 31 January 2018, Synlait has invested $34.5 million in capital expenditure throughout New Zealand. The major components of this were the Synlait Auckland blending and canning facility ($11.2 million) the new wetmix kitchen at Synlait Dunsandel ($18.4 million). Synlait also established a new research and development centre in Palmerston North. . .
This is good news for farmers and the wider economy.
The anti-dairying movement gets a lot of attention, much of it based on mis-information and emotion, but that doesn’t change the importance of the industry as a major export earner.