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Thread: FSF - Fonterra

  1. #21
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    Ok it has to be said but well done Fonterra. When the price was low they were criticized for stockpiling and buying up coolstore space all over country. Now the results of that have become apparent and they have done a good job despite the global crisis. This is a good result especially since the Euro welfare farmers are still going spastic about the low prices.

  2. #22
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    Quote Originally Posted by Nevl View Post
    Ok it has to be said but well done Fonterra. When the price was low they were criticized for stockpiling and buying up coolstore space all over country. Now the results of that have become apparent and they have done a good job despite the global crisis. This is a good result especially since the Euro welfare farmers are still going spastic about the low prices.
    Increasing the payout from $5.10 to $6.10 while the NZD has gone up 40%+ is a good outcome.

  3. #23
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    Quote Originally Posted by Anna Naum View Post
    Increasing the payout from $5.10 to $6.10 while the NZD has gone up 40%+ is a good outcome.
    I think the big chance they took to take stock off the market in MArch and April to sell to the Chinese and other markets now has really paid off. I have a friend who made $500mill for JP Morgan by leasing oil tankers and storing oil when it was at $35. Fonterra seems to have done the same thing. An extra 1Bill for NZ is great and will make a huge difference in these times as Farmers have also had a good season. Still I think more than a few farmers will be paying down the mortage. As interest rates are forecast to go up next year and its a good time to be ready to pare debt before that happens.

  4. #24
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    Agree with Nevl - most of the extra payout will go straight onto the mortgage so the flow on effect for the rest of the country won't be as great as other years. The banks may even enforce it!
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  5. #25
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    Farmers can't not spend for ever. Don't forget theyve been doing that already for the last 12 months. Plenty of money will be going on fertiliser and feed, and any equipment that needs replacing will be replaced. MORTGAGE will be paid down, but some essential spending will be made now as well.

    Also interesting to note as this is a discussion about about a proposed share float, that if we were indeed fonterra shareholders we would be absolutely disgusted with this result. Earnings guidence down from 55 cents per share at the start of the year to 35 cents now. Fonterras latest recapitalisation plans priced their shares at a divedend yield of 12% this announcement represents a yield of closer to 8% so makes that looks less attractive too. They need to find ways to maintain their margins if they are to be a long term success story.

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    Quote Originally Posted by Doyle View Post
    Plenty of money will be going on fertiliser and feed,
    That money would have been spent anyway. My guess is a lot of banks wont let them take the cash out once the payout goes in (ie. to get their LVR to a more respectable number after farm values have fallen)..
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  7. #27
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    Question Dumb question time from a non rural person

    How do these payouts work.

    Are what they are saying that this is expected to be the average price /payout over the year.
    As the price keeps changing, Now i'm sure the farmers do not get paid out once at the end of the year??

  8. #28
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    Jay you are correct. Farmers definitely don't get paid out once at the end of the year. This would just create even more working capital issues for farmers.

    My basic understanding is that they get paid out monthly on their production, however, since farmers don't produce all year round they don't recieve the 'full milk payout' but only a portion of this. I think this is why you hear them talking about the final payout at the end of the season and how much 'extra' or 'less' they will get in the next few dry months when they aren't producing.

    I would be happy to be corrected if I'm wrong, I only have a very basic understanding.

  9. #29
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    Quote Originally Posted by Jay View Post
    How do these payouts work.

    Are what they are saying that this is expected to be the average price /payout over the year.
    As the price keeps changing, Now i'm sure the farmers do not get paid out once at the end of the year??
    Basically Fonterra tries to estimate what will be paid out at the end of the year and starts making progress payments towards this amount. As the year develops they can on occasion change the payout forecast as they did earlier this year when they dropped it to $4.55. Since then of course markets have improved and now they have better data and more of the years supply has being sold and cash brought back to NZ and they are updating farmers on what the full years payout will likely be. As the year goes on the estimates will get better naturally. They try to provide as much detail as possible so farmers can hopefully manage farm expenditiure so that it matches income and preserve working capital.

  10. #30
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    Thanks Nevl and Turboman, thought it must be something like that, but was never really sure

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