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24 Apr 2014 3:58
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  •   Home > News > Business

    Fonterra lifts milk payout forecast

    Fonterra says it will pay its farmer shareholders $8.30 per kilogram of milk solids for the milking season, 50 cents up on its previous estimate.


    Fonterra
    Fonterra

    Fonterra has hiked its forecast payout to farmers for a second time in as many months while warning earnings in the first half will be "significantly lower" than in 2013.

    On the eve of the release of its 2013 full-year results, Fonterra on Tuesday lifted its forecast payout by 50 cents per kilogram of milk solids to $8.30/kgms on continuing global demand for whole milk powder, adding to the 30 cents per kgMS increase last month.

    Fonterra kept its estimated dividend of 32 cents per share, despite the prospect of "significantly lower" first-half earnings in 2014, as it can draw upon its balance sheet and cash flow performance, chief executive Theo Spierings said in a statement.

    "The higher cost of goods will make it more difficult to drive earnings growth in our consumer and food service businesses in the first half of this financial year.

    "Prospects for the second half look more positive for our consumer businesses, but remain uncertain for NZ Milk Products."

    The NZ Milk Products unit was embroiled in the false food scare last month, when whey protein concentrate was thought to be contaminated with a potentially dangerous strain of bacteria. Ultimately a harmless bacterium was identified.

    Fonterra will announce its 2013 results on Wednesday, and is expected to miss prospectus forecasts with earnings before interest, tax and one-time items of about $1 billion in the year ended July 31.

    Units in the Fonterra Shareholders' Fund fell 0.8 per cent to $7.12 on Tuesday, and have gained 2.1 per cent this year.


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