KEY POINTS:
Fonterra has lifted the milk payout to its 11,600 farmers for the 2006-2007 season to $4.46/kg milksolids, it said today.
The company said $52 million worth of premiums would bring the total payout to $4.50/kg.
The forecast for the season, which ended on May 31, had been $4.35.
The dairy giant has already made a preliminary forecast of NZ$5.53 a kg for the coming season, with some economists predicting rising commodity prices and strong demand will actually push that to $6.60 or higher.
Today's result is an 11 cent improvement on the final payout forecast in May and comprised a milk price of $3.87/kg milksolids -- up 3c/kg on the forecast -- and an added value component of 59c/kg up eight cents.
At $4.50, the payout is up 3.4 per cent on the forecast, and 9.1 per cent on the previous season's $4.10/kg final payout.
Fonterra chairman, Henry van der Heyden said, the payout was positive given the NZ dollar's high exchange rate and the fact that commodity prices did not surge until the final quarter of the year.
"While we had record prices at the end of the season this was not the case for the full year," he said in a statement.
The total payout represents $5.6 billion of payments to shareholders -- an average of $482,758 for each farmer. Some farmers with several properties and large herds will receive multi-million dollar payouts.
But van der Heyden warned that with international commodity prices now significantly higher - the prices with which those two arms of the company had to compete to obtain milk - margins were now beginning to come under pressure, particularly in the ingredients business.
The season to May 2007 had the highest average dollar conversion rate of US67c for each NZ dollar, but soaring international dairy commodity prices boosted revenues $881 million to $13.9 billion.
The record sales were matched by record production, including contract milk, of 1.246 billion kg milksolds, 3 per cent above the previous record of 1.21 billion kg set in 2005/06.
The increased volumes sold boosted Fonterra's total costs -- excluding the payout -- by $259 million to $6.1 billion.
External sales by Fonterra Ingredients -- now known as Fonterra's "global trade" and "ingredients" increased by 7.3 per cent to $9.9 billion on the back of those higher volumes. Its operating surplus before non-recurring items was $896 million, up $449 million on the previous year.
External sales volumes were 2.5 million tonnes, 344,000 tonnes higher than the previous year.
The operating revenue for Fonterra Brands - selling consumer goods such as yoghurt and butter -- lifted 5.4 per cent to $4 billion, as a result of higher sales volumes and changes in product mix and pricing. Its operating surplus before non-recurring items, rose by $36 million to $324 million.
Fonterra chief executive Andrew Ferrier said that boost in the added-value part of the payout came from benefits of a better focus on customers and consumers, a stronger focus on the brands, and investments to increase manufacturing efficiency and reduce energy consumption.
The company retained an emphasis on cost reductions and lower working capital, and cut total operating expenses including interest by $25 million from the previous season in spite of inflation running at around 3 per cent and interest rates continuing to rise.
Mr Ferrier said Fonterra's share of associate earnings, including new investments in San Lu and DMV Fonterra Excipients, increased from $28 million to $61 million.
Fonterra's total net interest-bearing debt at May 31, 2007 was $582 million lower at $5.0 billion, and it had a positive operating cashflow of $1.3 billion even after making significant investments.
He said $255 million remained with shareholders as a result of the transition to the new share standard, and the company's debt to debt-plus-equity ratio at May 31 was 50 per cent compared to 52.1 per cent at the same time in 2006.
- NZPA