While dairy farmers are struggling with a forecast Farmgate milk price of $3.90 per kilo of milk solids, Dairy Co-operative Fonterra is reporting record rises in earnings before income and tax, as well as net profit after tax.
However, the Fonterra Board says it will pay a dividend in April and August to help shareholder dairy farmers through a critical cash flow period.
In the period ended January 31, 2016, the co-operative has reported a 9.3% fall in income from $9746 million in the previous reporting cycle to $8838 million.
It says normalised earnings before interest and tax (EBIT) of $665 million is up 77% over the previous comparable period.
However, net profit for the half year to January 31, 2016, rose 123% from $183 million to $409 million.
“Our forecast Farmgate Milk Price of $3.90 per kgMS reflects weak global dairy prices, with Whole Milk Powder decreasing around 17% this season to date,” says Fonterra chair John Wilson.
“A forecast total available for the payout of $4.35-$4.45 per kilo of milk solids currently equates to a forecast cash payout of $4.30 per kilo of milk solids after retentions for a fully shared-up farmer,” he says.
“Our total forecast dividend for the current financial year is 40 cents per share. The Board has today declared a 20% dividend which will be paid in April,” says Wilson.
“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,” he says.
