As Fonterra's NZX-listed units languish near an all-time low, analysts say the market will remain cool on the dairy giant until it begins delivering evidence of operational improvements and better financial results.
The units, which provide outside investors with access to the co-operative's dividend stream, hit a record closing low of $4.60 last month.
That was 43 per cent below the all-time closing high of $8.09 they hit in May 2013. The units closed with no change last night at $4.62.
"Fonterra has been a terrible performer," said Mark Lister, head of research on private wealth at Craigs Investment Partners. "There's [no other way] you can describe it.
"Part of that is the vagaries of the global markets and the space they're in, but a lot of it is their own doing. It hasn't been the most well-managed or well-governed company in the market's eyes."
Fonterra posted a disappointing half-year result in March, with profit tumbling 16 per cent to $183 million.
The result also dashed expectations for a higher dividend, which would have partly offset lower milk prices. The company reduced its dividend forecast to a range of 20c to 30c a share, from 25c to 35c previously.
Fonterra's gearing ratio jumped to 50.7 per cent from 44.6 per cent a year earlier, largely from higher capital expenditure.
Lister said investors were wanting to see some real evidence of change within the firm.
"The market is going to be cynical about Fonterra until it sees some evidence of the changes they're making actually flowing through to hard results," Lister said.
"Until it comes through in the numbers, the company will be in the dog box to some degree."
Morningstar analyst Nachi Moghe said in a research note that the unit price was trading well below his fair value estimate of $6.
"We believe the market is frustrated with management's patchy performance and execution missteps and consequently shares are unlikely to respond until the company delivers sustainable growth," Moghe said.
Fonterra, which is in the middle of a wide-ranging review of its business, announced earlier this month that it would slash 523 jobs to save $60 million in annual wage costs.
The cuts are taking place against a backdrop of plunging dairy prices which are taking a heavy toll on Fonterra's farmer shareholders.
Wholemilk powder prices, which are central to the co-operative's farmgate milk price, have plunged 65 per cent - from US$5245 ($7942) a tonne to US$1848 a tonne - since April 2013.
In theory, falling milk prices are an advantage for Fonterra's manufacturing and dividend-paying side thanks to lower input costs, but the dairy price slump has not raised dividends.
Rickey Ward, New Zealand equity manager at JBWere, said financially strapped farmers selling farmer-only shares could also be contributing to the fall in Fonterra's listed units. Under Trading Among Farmers (TAF), the units mirror the price of farmer-only shares.
Ward said many investors misunderstood the Fonterra fund.
"It all comes down to a company that has kind of shrouded itself in secrecy. That's made it very hard to understand how you value it," he said. "I think when you see a [GlobalDairyTrade] auction go down, people think that's bad for profit but that's not necessarily the case."
The company reports its annual result in September. Craigs is forecasting net income of $533 million, up from $157 million a year earlier.
Fonterra in focus
• Selling the family farm