According to New Zealand news source, the National Business Review (NBR), Bank of New Zealand (BNZ) cut its forecast amid continued weakness in worldwide dairy prices.
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According to NZX whole milk powder futures, whole milk powder prices, key to Fonterra’s payout, are due to decline by about 3% at next week’s Global Dairy Trade Auction.
The dairy co-operative says that earning will rise to between 45 and 55 cents a share, up from an earlier forecast of 40c to 50c.
With a forecast farmgate milk price of $4.60, this lifts the total available payout to $5.05-5.15kgMS.
Fonterra’s boost in operational performance for the first quarter of 2016 and business transformation benefits being delivered earlier than expected means it has also been able to increase the rate at which farmers are paid support of 50 cents per kgMS under an interest-free loan scheme instituted to help farmers through the current season.
Based on dividend policy, Wilson said, this season management would recommend an annual dividend of 35-40 cents per share, subject to board approval.
Fonterra is expecting record earnings this year.
Fonterra stated capital expenditure of $258 million was down 37 per cent, in line with its target, and running costs were down 4 per cent to $628 million.
“In addition, an increased portion of product is being sold through bilateral customer agreements for a premium on prices achieved on GDT”, Spierings said. “We are benefiting from the investment in new plants in New Zealand, which is improving our manufacturing options and reducing peak costs”, said chief executive Theo Spierings.
In October, ratings Standard and Poor’s downgraded Fonterra’s credit rating from “A” to “A minus”, reflecting the agency’s concerns about the co-operative’s dairy giant’s debt levels.
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Fonterra also confirmed 835 staff had been made redundant as part of its two waves of restructuring this year, up from 750 announced in August.
