The Fonterra Shareholders' Fund, which holds 7.5 per cent of the world's largest dairy exporter, should be able to raise its 2015 dividend forecast given it expects to pay farmers less for their milk, reducing its input costs, a unitholder told the fund's annual meeting in Auckland.
Fonterra has forecast a farmgate milk price of $5.30 per kilogram of milk solids and a dividend in the range of 25-35 cents per share. Last season's dividend fell significantly to just 10cps on the back of reduced earnings by the group and the high $8.40/kgMS farmgate milk payout.
Higher milk prices mean a better return for farmer shareholders but the external investors' fortunes mirror that of the company which last year faced higher input costs for its milk, crimping margins. There was no talk at today's Fonterra Shareholders Fund annual meeting as there was at Wednesday's annual meeting of the cooperative in Palmerston North, of maximising the best returns for farmers.
Unitholder James Morrison said while he accepted last year's reduced dividend, looking ahead at a potential $5/kgMS payout, which is what some bank economists are suggesting it could fall to, should mean a dividend of at least 44cps if not 75cps.
Chief executive Theo Spierings said the forecast for both the milk payout and dividend would be revised early next month but the cooperative had a strong focus on earnings - to grow volumes and keep prices up. "We're going to focus on costs and cashflow and are going to drive very hard for earnings," he said.