Fonterra increases 2015/16 farmer payout forecast after performance boost

Fonterra, the world's largest dairy exporter, announced today it has increased its earnings per share forecast to between NZ$0.45 and NZ$0.55 - up from a range of NZ$0.40 to NZ$0.50.

With a farm gate milk price (FGMP) forecast of NZ$4.60 per kg of milk solids (kgMS), Fonterra's total payout for the 2015/16 season currently stands at between NZ$5.05 and NZ$5.15.

"While it is tough on farm due to low global milk prices, farmers will welcome the ongoing improvement in Fonterra’s performance delivering increased returns,"​ said John Wilson, chairman, Fonterra.

"Performance is well ahead of last year and we are hitting our targets on gross margins and operating and capital expenses."​

"At the same time, the acceleration of business transformation initiatives is generating significant cash savings. We are on track, and therefore able to lift our forecast earnings per share range,” ​Wilson added.

In September, Fonterra increased its FGMP forecast for the 2015/16 season by NZ$0.75 to NZ$4.60 per kilogram of milk solids (kgMS) after a lift in global dairy prices. 

It announced an opening FGMP forecast for the 2015/16 season, which began June 1, of NZ$5.25 per kgMS. By August, it had slashed its estimate to NZ$3.85.

The September increase, Fonterra said at the time, reflected the jump in global dairy prices, Fonterra said.

The Global Dairy Trade (GDT) Price Index, a weighted average of percentage changes in dairy commodity prices on the Fonterra-owned platform, rose 52.1% over four auctions in August, September and October.

The GDT Price Index has since fallen 10.5% over the last two auctions - 3.1% on October 20 and 7.4% on November 3.