Tatua delivers payout cream and improved dairy earnings

Good times continue for Tatua suppliers (Picture supplied)

Blue chip dairy company Tatua has declared a bumper milk price and group earnings while warning uncertainty around emerging Government environmental policies has "real potential" to undermine investment confidence.

The Waikato cooperative exporter will pay its 107 supplying farms $8.50/kilogram milksolids cash for the 2018-2019 financial year - that's after retaining earnings for reinvestment of $1.16/kg. The previous year milk payout was $8.10/kg.

Industry dominator Fonterra paid its farmers $6.35/kg and no dividend.

Tatua group earnings of $140 million before retentions and tax equated to $9.66/kg, up from $8.62/kg the previous year.

Revenue was $364m, an improvement on the previous year's $349m.

The company said in deciding the payout, it had aimed to achieve a balance between the needs of shareholders' farming businesses and Tatua's reinvestment needs for long-term environmental, financial and social sustainability.

In the coming year it would develop a new engineering support facility and make a major investment in wastewater treatment infrastructure.

"While we remain optimistic in our outlook for dairy and the season ahead, our optimism is tempered by continuing volatility in the global trade arena. In addition, uncertainty around emerging domestic policies on both climate change and fresh water management have real potential to undermine investment confidence."

Tatua remained cautious regarding borrowings management, the company said.

Gearing, debt dividend by debt plus equity, averaged 32 per cent for the year, slightly lower than the previous year's average. Gearing at the end of the financial year was 27 per cent.

The 100-plus year old cooperative at Tatuanui, north of Morrinsville, has 370 staff and exports specialist products to more than 60 countries. It processed more than 200 million litres of milk during the year.