News Milk
Fonterra promises higher returns and dividends
Fonterra has today launched a revised strategy in which the New Zealand dairy co-operative promises a higher dividend and return to its member dairy farmers. Fonterra also remains committed to its path of adding more value to milk through a strong focus on high-quality dairy ingredients.
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
The revised strategy does not contain much surprise, because Fonterra wants to deployed line especially persevere. Fonterra has recently been focusing specifically on high-quality dairy ingredients for the business to businesssegment. As a result, several consumer companies have recently been divested, or are about to be. Among other things, the Australian division is still for sale. It is said that FrieslandCampina interested in this. Fonterra also emphasizes that New Zealand milk is the basis. Chinese dairy farms have already been divested.
More dividend
Fonterra expects that the chosen course will yield a higher return. This is also linked to concrete expectations that are higher than in the past. For example, the return target on invested capital has been increased to 10% to 12%. This was previously 9% to 10%. The dividend policy has also been tightened. In the future, 60% to 80% of the profit achieved will be paid out in the form of dividends to the member dairy farmers. This was previously 40% to 60%. The higher targets will not be at the expense of the basic milk price, the management promises. The aim is to achieve the highest milk price in New Zealand, because this has not always been the case in recent years.
CEO Miles Hurrel says Fonterra has a solid foundation, with the recently published 2023/24 annual figures above the five-year average, evidence of this, he says.