Fonterra Co-operative Group has lifted this season’s milk price due to a strengthening in global dairy trade prices and constrained milk supply in key producing regions.
CEO Miles Hurrell said the co-op would lift its 2024/25 forecast Farmgate Milk Price midpoint by 50 cents to $9.00 per kgMS and FY25 earnings guidance of 40-60 cents per share.
It means Fonterra’s new forecast farmgate milk price range for the 2024/25 season is $8.25-$9.75 per kgMS, with the co-op continuing to maintain the wide range due to the relatively early stage of the season.
“I’m sure [it] will be welcome news for farmers, particularly when combined with the 55 cent total dividend for FY24 also announced by the Co-op today,” Hurrell said.
“We’ve also announced today our forecast earnings for FY25 of 40-60 cents per share.
“The forecast earnings range reflects an expectation we will maintain strong margins in all three of our sales channels, while also investing in the co-op’s IT and digital transformation and incurring higher tax expenses.”
Tax time
cfter several years of strong earnings performance, the Co-op exhausted its tax losses in FY24 and will now be paying tax.
CFO Andrew Murray said it means the co-op will declare a dividend from FY25 and imputation credits would now be available to be attached to its dividend.
“To enable all shareholders to receive the imputation credits, we are changing how we treat supply backed shares for tax purposes which means that more tax will be paid by Fonterra.
“While this does not impact the operating performance of Fonterra, it will reduce our reported earnings per share in future years, as Fonterra will have paid the tax on the cash to be distributed,” Murray said.
