Fonterra confirms payout for 2009

Fonterra has confirmed a $NZ5.20/kg milk solids payout for its farmers in the 2008-2009 season, and said directors have held back a further one cent/kg, equivalent to $US12.81 million ($A14.67 million).

The payout was made up of $NZ4.72/kg milk price and an added-value dividend of 48 cents/kg.

Fonterra said on Wednesday its revenue was $NZ16.035 billion for the 12 months to July 31, down 17.8 per cent on $NZ19.512 billion for the 14 months to July 2008.

Its profit was $NZ422 million, up 73 per cent on the previous period’s $NZ244 million.

Fonterra warned farmers in May that if there was any more money over its forecast $NZ5.20/kg, it would be retained by directors to strengthen their balance sheet.

Directors yesterday announced they have lifted the forecast payout for the current season, 2009-2010, by 55 cents to $NZ5.10/kg.

Fonterra said that though the milk price was down on the previous season’s record $NZ7.59/kg, this year the cooperative had boosted its distributable profit to $603 million, giving farmers the 48 cent dividend, plus the one cent retention.

In 2008, the distributable profit for the 14 months was $364m – equivalent to 31 cents/kg, and 24 cents of that was retained.During the 2009 season, Fonterra collected a record total of 1.281 billion kg of milksolids, including contract and “tactical” milkflows of 54 million kg.

This was a seven per cent lift on the 2008 season, which was affected by drought.Fonterra said its balance sheet was stronger, with a gearing ratio (net interest-bearing debt compared with net interest-bearing debt plus equity) down at 52.7 per cent as of July 31, from 57.4 per cent a year earlier and 61.5 per cent at the January 31 interim result.

Chairman Sir Henry van der Heyden said improved profitability meant the added-value payment had increased as a proportion of total farmer payout.

Chief executive Andrew Ferrier said the company’s global sales team had to strike a balance between managing volumes and achieving appropriate prices, and stockpiled inventory which had left the company better able to make sales in a recovering market during the second half of the year.

A strong second-half sales performance meant Fonterra recovered well from a slow first-half, with NZ-sourced sales volumes for the year growing five per cent.

As a result, total inventories were reduced to $NZ2.7 billion by year end, $NZ2.4 billion lower than at January 31, and $NZ600 million lower than at July 31, 2008.

Sir Henry said total share equity increased by a net $NZ260 million — as new share issues exceeded payments to shareholders redeeming shares or leaving the cooperative — partly making up the ground lost in the previous year when equity fell by a net $NZ600 million.

Source: NZPA

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