Farming
- Fonterra increases forecast Farmgate Milk Price midpoint for 2024/25 season to $9.00 per kgMS.
- Strong earnings in FY24 lead to a total dividend of 55 cents per share.
- Fonterra explores divestment of its Consumer businesses to focus on core strengths.
Fonterra Co-operative Group Ltd has announced a 50 cent rise in its forecast Farmgate Milk Price midpoint for the 2024/25 season, bringing it to $9.00 per kgMS. The earnings guidance for FY25 has also been set at 40-60 cents per share. CEO Miles Hurrell attributed this increase to strengthened Global Dairy Trade prices and constrained milk supply in key producing regions. He said, “I’m pleased to be announcing an increase in this season’s forecast Farmgate Milk Price, which I’m sure will be welcome news for farmers.”
The updated Farmgate Milk Price range for the 2024/25 season is set between $8.25 and $9.75 per kgMS. Mr Hurrell added that this wide range reflects the early stage of the season. In addition, Fonterra expects to maintain strong margins across its sales channels, despite ongoing investment in IT and higher tax expenses. The co-op exhausted its tax losses in FY24 and will now begin paying tax, impacting future reported earnings per share.
Fonterra's Chief Financial Officer Andrew Murray commented on the change, stating, “When we declare a dividend from FY25 and beyond, imputation credits will now be available.”
The full-year financial results for FY24 show a final Farmgate Milk Price of $7.83 per kgMS and a total dividend of 55 cents per share, including a 15 cent interim, 25 cent final, and 15 cent special dividend. Profit after tax was NZ$1,168 million, and EBIT from continuing operations stood at NZ$1,560 million. Fonterra delivered an 11.3% return on capital, with CEO Hurrell noting, “We’ve maintained positive momentum and delivered earnings at the top end of our forecast range.”
The co-op continues its strategic review and is exploring divestment options for its Consumer businesses, including Fonterra Oceania and Sri Lanka, to focus more sharply on its strengths in Foodservice and Ingredients.