Fonterra full-year result benefits all

Fonterra Cooperative Group’s full-year revenue results of just under $20 billion will financially benefit all New Zealanders. The Federation is full of praise for the New Zealand owned and controlled cooperative’s staff and management.

“Fonterra is to the international dairy industry what the All Blacks are to rugby and with the wider economy slowing down, New Zealand needs every export dollar. On this result, Fonterra’s staff and its supplier-shareholders have delivered,” says Robin Barkla, Federated Farmers Dairy Vice-President and a Fonterra shareholder.

“The key thing with Fonterra is that it is a cooperative and being a cooperative, it is owned by hard working farming families.

“Unlike foreign companies who send our money offshore, Fonterra is bringing money into New Zealand. According to MAF’s national dairy model around 85 percent of what farmers generate in revenue goes outside the farm gate. On that measure, everyone has a piece of the dairy action.

“Farmers really applaud the effort put in by dairy factory workers, tanker drivers, scientists, marketers, management and of course, our board. Being a Kiwi owned cooperative it’s a team effort and what a great result to send Andrew Ferrier off on.

“A milk price of $7.60 per kilogram of milk solids (kg/MS) translates to around 66 cents a litre for raw milk at the farm gate. Because half of what we need to farm is purchased locally, that feeds income into towns before it flows into the cities. Everyone benefits from today’s result.

“On top of this is an increase in the distributable profit to $0.65 per share. This translates into $0.30 kg/MS extra for a fully shared-up farmer pushing the total payout to $7.90 kg/MS. That should put a big, big smile on the Minster of Revenue’s face.

“I also think many farmers will be cracking open a carton of Anchor blue to celebrate.

“Farmers also need to take a bow because milk volumes were up 4.7 percent to 15.4 billion litres. Given the season started so unpromisingly, the endless autumn we’ve enjoyed has delivered a big economic boost.

“Significantly, Fonterra’s retentions policy means something like $470 million is being retained. Of course there’s tax, one offs and non-cash items to come from that, but it still leaves a significant sum to grow the business.

“As debt is within comfortable limits, Fonterra Cooperative Group has the means to grow from retentions and the balance sheet. Compared to the $300-500 million a proposed unitised Shareholder Fund could deliver, you’ve got to seriously ask if the angst it’s causing, is really worth it.

“New Zealanders are better off from dairy’s big team effort because the export economy pays New Zealand’s way in the world and all,” Mr Barkla concluded.