Fonterra Announces Increase In Distributable Profit Forecast
Fonterra announced today it has lifted its Distributable Profit forecast range for 2009/2010 to 40 to 50 cents per share, from the 35 to 45 cents per share forecast in December 2009.
There is no change to the target dividend range of 20 to 30 cents per share. This would indicate 10 to 30 cents per share of Distributable Profit will be retained.
The forecast Milk Price of $5.70 per kilogram of milk solids (kgMS) for the current 2009/2010 season is also unchanged.
Chief Executive Andrew Ferrier said the increase in the Distributable Profit range was driven primarily by gains arising from divestments, improved joint venture returns and lower funding costs through improved working capital.
Note: Changes to Key Terms
The capital structure changes approved at November’s annual meeting mean some changes to the terms used by Fonterra to describe farmer payments.
The key terms are as follows:
Milk Price: the price paid to farmer shareholders for milk supplied to Fonterra, on a cents per kilogram of milksolids (kgMS) basis.
Distributable Profit: the total profit from Fonterra’s business activities available for distribution to farmer shareholders by way of dividend.
Dividend: the amount of Distributable Profit actually paid to farmer shareholders in respect of any financial year, expressed on a cents per share basis.
Retentions: the amount of Distributable Profit that is not paid to farmer shareholders and is retained within Fonterra’s balance sheet.
Value Return was previously used to describe the amount of Distributable Profit paid out to farmer shareholders, on a cents per kgMS basis. This term is no longer relevant as profit is now being distributed via dividend payments.
Similarly, payout is no longer a relevant term because farmer shareholders can now hold both supply-backed and dry shares.
About Fonterra
Fonterra is a global leader in dairy nutrition – the preferred supplier of dairy ingredients to many of the world’s leading food companies. Fonterra is also a market leader with our own consumer dairy brands in Australia/New Zealand, Asia/Africa, Middle East and Latin America.
The farmer-owned New Zealand co-operative is the largest processor of milk in the world, producing more than two million tonnes of dairy ingredients, value added dairy ingredients, specialty ingredients and consumer products every year. Drawing on generations of dairy expertise, Fonterra is one of the largest investors in dairy based research and innovation in the world. Our 16,000 staff work across the dairy spectrum from advising farmers on sustainable farming and milk production, to ensuring we live up to exacting quality standards and delivering every day on our customer promise in more than 100 markets around the world.
