Chairman John Wilson said the higher forecast farmgate milk price for the new season reflected continuing strong international prices for dairy.
“At the beginning of this season our forecast was that dairy commodity prices would continue at or near current levels until the fourth quarter of 2013.
“However, supply constraints in Europe and China during the northern hemisphere spring have contributed to an increase in dairy prices of 3% over the past two months. In addition, the NZ dollar has weakened against the US dollar. These factors have contributed to our updated forecast,” he said.
The co-operative has also confirmed a further increase to the Advance Rate schedule, starting from $5.50/kg MS.
“A higher Advance Rate provides our farmer-shareholders a strong start to the season and the opportunity to grow their own farming businesses.”
Fonterra Chairman John Wilson
“A higher Advance Rate provides our farmer-shareholders a strong start to the season and the opportunity to grow their own farming businesses.”
Wilson said Fonterra’s board has amended the co-operative’s dividend policy.
“The board has approved a new policy that aims to deliver a sustainable dividend from FY14 onwards.
“When setting the dividend, the board will take into account short and medium term earnings to deliver a dividend per share of between 65–75% of adjusted net profit after tax over a period of time.
“The dividend remains at the board’s discretion and subject to market conditions and Fonterra’s financial position.
“Additionally, from FY14 we are adopting a qualitative earnings guidance approach rather than the previous quantitative earnings per share guidance.
“The changes mean we will provide more market commentary – but will no longer put numbers around future earnings per share. This new policy will enable the business to provide a longer term view on any potential volatility in earnings.”
