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Fonterra signals early dividend payments

  • March 23, 2016
  • 1 min read

Fonterra signals early dividend payments to support farmers' winter cash flows.

Fonterra Co-operative Group Limited has announced it intends to pay its forecast final dividend earlier, to support farmers at a time when on-farm cash flows are extremely tight.

Chairman John Wilson said the forecast total dividend for the current financial year is 40 cents per share.

“The Board today declared a 20 cent interim dividend which will be paid in April.  We intend declaring the remaining 20 cents per share in two dividends of 10 cents in May and 10 cents in August.

“The timing of these payments will help farmers’ cash flows at the time of the season that they need it most and is a specific response to the very challenging financial conditions our farmers are facing.

“The months May through to August are typically the most difficult financially for farmers, with lower forecast milk payments in these months.  We looked carefully at the available support options to us and bringing forward payment of the total forecast dividend is the best way we can support our farmers while continuing to retain the financial strength of Fonterra.”

The two dividends in May and August are subject to the Board’s approval at the time and Fonterra’s financial performance continuing to support its forecast earnings per share of not less than the current 45 to 55 cents forecast range per share.  The payments do not signal any intention to move away from Fonterra’s normal practice of twice-yearly dividends paid in April and October. They are also consistent with Fonterra’s dividend policy.

“We are firmly on track to achieve our forecast earnings of 45-55 cents per share, ahead of the 40-50 cents per share we indicated at the beginning of the season.  We are backing ourselves to support our farmers and confirmation of the first payment will be made in May,” said Mr Wilson.

Mr Wilson said the Board had considered an extension to the support loan provided early in the season which will total $383 million by April 2016, but based on the solid performance of the Co-operative in the first half it felt paying the final dividend earlier was the better option.

“This approach is directly related to the solid performance being achieved by the business.”

Fonterra would also continue to support farmers with on-farm costs through competitive pricing through its Farm Source stores and through discounts secured on necessities such as fuel and power.

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