Fonterra lifts forecast for distributable profit but keeps milk payment unchanged

Thursday 25th February 2010

Fonterra lifted its forecast for 2010 distributable profit, citing divestments, improved joint venture returns and lower funding costs.

Distributable profit, which excludes earnings from processing raw milk, will be 40 cents to 50 cents this year, up from an estimated range in December of 35 cents to 45 cents, the company said in a statement today.

It plans to retain the additional earnings – between 10 cents and 30 cents a share – and kept its forecast milk fat payment unchanged at $5.70 a kilogram. Its target dividend range was unchanged at 20 cents to 30 cents a share.

Fonterra used to combine its payments for milk with its returns from investments, making up a combined payment to its 10,500 farmers. Now it sets a price for the milk and pays a dividend on its investment income.

Fonterra’s farmers are allowed to hold shares up to 120% of their milk production under changes to the company’s capital structure last year. About a third of farmers chose to take up the additional shares and more are expected to take up more shares at the end of the season.

Businesswire.co.nz

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