Fonterra shares have become much more valuable

The share price of Fonterra, listed on the New Zealand stock exchange, has almost doubled in a year to 4,50 New Zealand dollars per share. This is also the highest level since the spring of 2021.

Fonterra has a fairly complex financial structure. The shares are held by the cooperative's member dairy farmers. External investors cannot directly own Fonterra shares. However, they can invest in the so-called Fonterra Shareholders Fund. Holders of these securities have no voting rights, but do benefit from price increases and dividends. A maximum of 10% of the total of 1,1 billion issued shares are available on the stock exchange in the investment fund for non-farmers. This is to prevent the dairy farmers from losing their influence on the cooperative. 

More dividends for shareholders
The stock price has risen considerably, particularly in recent months. This is related to the September launch of revised strategy. In this, the dairy cooperative promises a higher return and dividend. 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 dividend. This was previously 40% to 60%.

The improved results of recent years also interest investors. net profit fell in the broken financial year 2023/24, but was above the five-year average. According to analysts, the current favorable dairy market would also motivate investors to get in, as evidenced by the record high milk price that was recently announced. In addition, the simplification of the strategy appeals to investors. Fonterra is in the process of divesting most of the consumer business. The company also wants to leave Australia.