Even the likelihood of a crunched dividend in Fonterra's mid-year results this week sounds unlikely to dim growing optimism among the big dairy cooperative's farmer owners.
Buoyed by confidence in new leadership and anticipation of a full cream milk price for the 2020-2021 year, shareholders are confident Wednesday's interim results will bolster their slowly rebuilding faith in the performance of New Zealand's biggest company - even though the milk price they're in line for from strong global demand will have eaten into any interim dividend.
Farmer-shareholders have long recognised their co-operative ethos that a strong milk price impacts Fonterra's balance sheet as "cost of goods", and FY21 with its $7.60/kilogram milksolids forecast is shaping up as another one of those years.
Former Fonterra deputy chairman and director Greg Gent, a Northland shareholder, summed it up.
"You've got to be realistic. With the milk price we are getting, value-add (earning) is tough. Fonterra is delivering well, the feel of the company is completely different.
"I won't be expecting an outstanding result in the dividend with the milk price performing so well."
Gent hoped the Fonterra board would also have trimmed the dividend to keep money back.
"While the milk price is so strong perhaps more of the dividend finds its way into retentions to get that balance sheet back where it needs to be.
"The last regime cost us billions. The co-operative needs to get itself back into a strong position as soon it can."
The Fonterra Shareholders' Council, a watchdog for farmer interests, said shareholders suffered $4 billion wealth destruction between 2017 and 2019. The company in 2018 posted a loss of $196 million - its first since it was formed in 2001 - and in 2019, a loss of $605m.
It paid no interim dividend last year but returned to dividend in FY20, with 5c per share.
The world's fifth-largest dairy company by revenue earlier this month increased its 2020-2021 dairy season forecast farmgate milk price range to $7.30-$7.90/kgMS, up from $6.90-$7.50. The midpoint of the range, which farmers are paid off, increased to $7.60.
The company late last month lifted the bottom range of its FY21 forecast earnings guidance and narrowed the range to 25-35c per share, from 20-35c per share.
Fonterra shares can only be owned by supplying farmers, but publicly-available, non-voting, dividend-carrying units in those shares have since 2012 been listed on the sharemarket.
Shareholder and dairy industry leader David Jensen said strong milk price aside, he would be looking for "a reasonably consistent return to dividends, given we've been without them".
He would be looking for a positive ebit (earnings before interest and tax) result on Wednesday and a signal Fonterra was tracking towards a full-year dividend.
A shareholder who declined to be named said Fonterra would find trading in the second half of the financial year difficult because "the cost of goods has shot up in the second half".
"They might be conservative with their dividend information. They know the co-operative is rebuilding its balance sheet - it should never, ever, pay out cash it hasn't earned, like it used to."
Shareholders contacted by the Herald all remarked that confidence was returning after the financial shocks.
"The mood has changed. There's confidence in the senior level of management and the board now," said Gent.
"But while farmers have confidence in the Fonterra at the moment, their challenge is the future as farmers. As we meet some of these green targets levels of compliance across almost every aspect of our business, these things are hard."
Jensen said Fonterra felt like "a more stable ship".
"The culture feels better. But I am looking for a better description of aspirations and strategy. It feels bit underdone still in terms of what they want to achieve. That hasn't been well-articulated."
Fonterra is owned by around 10,000 milk supplying entities who must buy shares in the co-operative to supply milk. It was created in 2001 under special enabling legislation called the Dairy Industry Restructuring Act, which deregulated dairy exporting and allowed Fonterra to be formed from an industry mega-merger which absorbed 96 per cent of the sector, including the Dairy Board.
Listed Fonterra shares, which can also be traded by farmers, yesterday traded around $5. This time last year they were at $3.50.