Fonterra said it had confirmed its plan to pay an early dividend to help its farmers' cash flows.

The company said a solid result in the first nine months of the year had enabled the company to confirm an early dividend payment of 10 cents per share, to be made on June 7.

Fonterra said its intention was to declare another 10 cents per share in August, subject to financial performance continuing to support the current forecast earnings per share range of 45 to 55 cents per share. The co-op's forecast dividend for the 2016 financial year continues to be 40 cents per share, it said.

The performance over the first nine months reflected New Zealand ingredients continuing to achieve improved product mix returns and efficiencies, and improved gross margins in consumer and foodservice, supported by volume growth and lower input costs, it said.


Fonterra said its full year earnings per share forecast range reflected a range of possible impacts through to the end of the financial year.

"These include the completion of announced business sales in Australia, our New Zealand ingredients sales and inventory profile, our ability to contract and ship late season milk in difficult global market conditions, and the deteriorating geopolitical situation in Brazil and Venezuela," it said in a statement.

Chairman John Wilson said the co-op had performed strongly over the last nine months.
"While the milk supply and demand imbalance continues to impact global milk prices and our forecast farmgate milk price, the business is delivering on strategy and has maintained the good performance levels seen in the first six months of the financial year," he said.

The early dividend payment was signalled in Fonterra's first half results announcement.
Fonterra's forecast New Zealand milk collection for the current season is 1,558 million kg of milk solids, which was 3 per cent lower than last season, compared with its earlier forecast of a 5 to 6 per cent reduction.

Chief executive Theo Spierings said despite lower milk collections, ingredients gross margins improved to 16 per cent.

"We have continued to optimise our product mix by adjusting volumes away from reference products, such as whole milk powder, towards non-reference products, such as cheese and casein, to take advantage of the relative pricing," he said.

A strong sales performance has resulted in ingredients inventory volumes being 11 per cent lower than the same period last year.

Fonterra will release its 2016/17 season farmgate milk price at the end of May.

Market expectations are for a farmgate milk price next season around the mid $4 mark, compared with the 20115/16 price of $3.90 a kg of milksolids.