Fonterra Co-operative Group Limited announced a good performance in the first half of the current financial year.
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Normalised earnings before interest and tax (EBIT) were $665 million up 77 percent on the comparable period, and net profit after tax of $409 million up 123 percent.
Chairman John Wilson said that the supply and demand imbalance in the globally traded dairy market has brought prices down to unsustainable levels for farmers around the world, and particularly in New Zealand. The strong New Zealand dollar has also had a negative impact on the Milk Price.
"Our forecast Farmgate Milk Price of $3.90 per kgMS reflects low global dairy prices, with Whole Milk Powder decreasing around 17 percent this season to date. Forecast total available for payout of $4.35-$4.45 per kgMS currently equates to a forecast cash payout of $4.30 per kgMS after retentions for a fully shared up farmer.
"Our forecast total dividend for the current financial year is 40 cents per share. The board has today declared a 20 cent dividend which will be paid in April. We intend declaring the remaining 20 cents per share in two dividends of 10 cents in May and 10 cents in August to help support farmers at a time when cash flows are extremely tight."
Fonterra announced it intends to pay its forecast final dividend earlier, to support farmers at a time when on-farm cash flows are extremely tight.
"The timing of these payments will help farmers’ cash flows at the time of the season that they need it most and is a specific response to the very challenging financial conditions our farmers are facing.
"The months May through to August are typically the most difficult financially for farmers, with lower forecast milk payments in these months.
"We looked carefully at the available support options to us and bringing forward payment of the total forecast dividend is the best way we can support our farmers while continuing to retain the financial strength of Fonterra.†■