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Fonterra raises 2012 payout by 20 cents

Fonterra announced today an increased payout forecast range for the 2012 Season of $6.90-$7.00 for a fully shared up farmer, up 20 cents on the previous forecast.

The revised forecast comprises a Fonterra Farmgate Milk Price of $6.50 per kilogram of milksolids (kgMS), up from $6.30 kgMS, and an unchanged Distributable Profit forecast range of 40-50 cents per share.

Fonterra is required to consider its Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA).

FARMGATE MILK PRICE

Fonterra Chairman Sir Henry van der Heyden said the new forecast reflected a modest recovery in global dairy commodity prices over the past two months.  

Fonterra CEO Theo Spierings said prices had edged up in three of the last four fortnightly auctions on the online trading platform GlobalDairyTrade (GDT).  The GDT-Trade Weighted Index was now 5.8 per cent above its recent low in early October.  

Mr Spierings said world dairy trade growth was being led by powders (combined whole milk and skim). This reflects strong demand especially in emerging markets, including a number of ASEAN economies, as well as Brazil, Mexico and China.  

While foreign exchange volatility remains, the impact on the Fonterra Farmgate Milk Price becomes less further into the season as the proportion of foreign exchange hedging increases.

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