The 9,000 farmer-shareholders in New Zealand’s largest dairy company can expect a dividend at “the top end of its forecast range” for 2023, according to the Fonterra Co-operative Group.
The co-op has said this range is from ”65-80c/share”.
It is still in the process of finalising and having its full-year 2023 (FY2023) numbers audited, but Fonterra’s chief executive, Miles Hurrell, has delivered an upbeat update on its forecast normalised earnings for FY23, and full-year dividend.
Hurrell said today (Friday, August 11): “Fonterra has reported strong earnings through FY23 off the back of favourable ingredients margins.
“As we close out our books, we’re in a position to provide further guidance on where we expect to end the year.
“Furthermore, we expect to pay a full-year dividend at the top end of our dividend policy, which is 40-60% of normalised earnings.”
Fonterra will confirm its final FY23 earnings and full-year dividend next month.
The co-op also announced this week that it intends to return approximately NZ$800 million of capital to its shareholders.
Shareholders will receive a cash payment of NZ$3.00 per Fonterra Co-operative Group share.
Fonterra milk price
Its farmer-shareholders received a downbeat forecast on milk price forecasts for the 2023/2024 season just last week.
The co-op blamed reduced import demand for whole milk powder from greater China and the drop in whole milk powder prices for its revised forecast.
Fonterra has highlighted that overall Global Dairy Trade (GDT) whole-milk powder prices have fallen and China’s share of whole-milk powder volumes on GDT events has also tracked below-average levels.
It cut its milk price from $7.25–8.75/kg of milk solids (kg ms) with a midpoint of $8.00/kg ms, to $6.25–7.75/kg ms, with a midpoint of $7.00/kg ms.
But despite the milk price cut, its chief executive believes the “medium- to long-term outlook for dairy, in particular New Zealand dairy, looks positive”.
He said milk production from key exporting regions was flat compared to last year.