Fonterra drops forecast payout to farmers

Fonterra drops forecast payout to farmers
Photo credit: File

Fonterra has dropped its forecast payout to farmers and it's unlikely it will pay out its full dividend, the co-operative has announced.

The 2017/18 forecast Farmgate Milk Price has been lowered by five cents to $6.70 per kg of milk solids. 

Fonterra also announced that its previously announced guidance range of 25 to 30 cents has been held but the co-operative is indicating that it will be at or slightly below this range.

The full year dividend is likely to be the 10 cents that was already paid to farmers in April.

Fonterra chairman John Monaghan said these decisions were made by the board in the best long-term interests of its farmer shareholders and unitholders.

"During the process of closing our books for the financial year end, the need for these actions has become clear. 

"Our forecast performance is not where we expected it would be. While the numbers are not finalised, our margins were less than we forecasted right across our global Ingredients and consumer and foodservice businesses."

Fonterra lost a giant $348 million at the beginning of the year due to a compensation payout to French company Danone and a write down of its investments to Chinese company Beingmate. 

Mr Monaghan said he wanted to be upfront with farmers.

The co-operative's full year results will be announced on September 13.