Fonterra confirms payout thanks to value-add performance

Wednesday 29th July 2009

Fonterra, the New Zealand dairy cooperative, has confirmed its forecast payout on milk at NZ$4.55 per kilogram of milksolids in the 2009/10 season, despite falling world milk prices.

The chairman for the world's largest dairy products exporter, Henry van der Heyden, said improved earnings on the value-added products side of the business, along with growing contributions from Australian acquisitions and tight cost control supported the stable payout.

The forecast milk price had dropped to $4 per kgMS, down 10 cents on the last reforecast, in May, while forecast profits from other activities had risen from 45 cents to 55 cents.

The New Zealand dollar at around UAS65 cents was hurting Fonterra and the milk price forecast would have been lower had it not been "some early and encouraging signs in international markets".

Next season's total milk production had been lowered owing to the impact of cold, wet weather on growing conditions over the winter, and reduced on-farm spending for productivity, reflecting tougher economic times.

This season's payout of $5.20 per kgMS remains the likely outcome, van der Heyden said. The figure will be finalised in September.

Businesswire.co.nz

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