December 11, 2012
Fonterra Co-operative Group Limited has revised up its pay-out forecast range for the 2012/13 season by US$0.25 higher on the previous forecast range.
The Fonterra Board announced a higher forecast Farmgate Milk Price of US$5.50 per kilogramme of milk solids for the 2012/13 season, up from US$5.25 on the previous forecast; a forecast Net Profit after Tax range of US$0.40-0.50 per share, consistent with the recent Fonterra Shareholders' Fund Offer prospectus; and a US$0.40 increase in advance rate payments to farmers.
Fonterra is required to consider its Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA).
Fonterra Chairman Henry van der Heyden said, "The immediate effect of this decision is that our farmers will have more money flowing into their bank accounts from late January when they are paid for the previous month, and that will help them with their cash flows. Between August 1 and the most recent GlobalDairyTrade (GDT) trading event, prices have increased by an average of 17.7%. While there was a drop at last week's GDT event, it has not changed our overall commodity price forecasts."
Chief Executive Theo Spierings said Fonterra's strong balance sheet meant that from a cash flow point of view the Co-operative was in a position to increase payments to farmers over the next few months without any significant risk to its financial stability.
Spierings said while the outlook for any movements in the New Zealand dollar exchange rate were neutral, the impact of weather events in other markets were likely to support the lift in forecast Farmgate Milk Price in the first half of 2013.
