Fonterra increases 2015/16 farmer payout forecast after performance boost

By Mark ASTLEY contact

- Last updated on GMT

Fonterra increases 2015/16 farmer payout forecast after performance boost

Related tags: Milk

Fonterra has increased its payout forecast for the 2015/16 season on the back of a strong August to October performance.

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.

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