Twin spring boosts for Fonterra farmers
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Fonterra farmers have welcomed two financial announcements from the company – 40c a share in final dividends for FY2024 and a 50c/kg milksolids increase in the FY2025 farmgate milk price forecast.
Both spring boosts to farm cashflows were announced with a strong set of FY2024 trading results to the July 31 balance date.
Chief executive Miles Hurrell said the lift in this season’s forecast milk price follows further recent strengthening in Global Dairy Trade prices and constrained milk supply in key producing regions.
The forecast is now $9/kg mid-point in a range of $8.25 to $9.75.
The mid-point is second only to the 2021 payout of $9.30 and the FY24 total dividend of 55c/share second only to 59C paid in 2007.
The 55c is made up of 15c interim dividend, 25c final dividend and 15c special dividend.
Hurrell said the special dividend comes from capital management efficiency and ongoing balance sheet strength.
The final milk price for 2024 was $7.83/kg milksolids, the fourth highest in Fonterra’s history, but below those of the two previous seasons.
Total payout for a fully shared-up farmer was $8.38, close to the break-even level for farming operations.
Earnings per share from continuing operations were 70c, an aggregate before interest and tax (EBIT) of $1.5 billion, down from $1.7bn the year before.
Net debt at balance date was $2.6 billion, now only half what it was five years ago.
The consumer division has contributed $199 million EBIT, up $324m on the year before.
“The businesses in scope for potential divestment are performing well.
“We remain committed to s pathway that would maximise the value of these businesses for our farmer shareholders and unit holders.”
The foodservice division also had a very good result, $463m EBIT, up $138m.
The biggest division, ingredients, returned $898m EBIT, down $657m.
“Ingredients delivered strong returns, although down when compared with the record results seen in FY2023,” Hurrell said.
“Our co-op is in good shape, and I’m pleased to have delivered another year of solid returns to farmer shareholders and unit holders.”
