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Thread: Fonterra

  1. #241
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    Quote Originally Posted by RTM View Post
    Yes. Now down just -0.9%. Hoping that turns positive today.
    Lucky the COVID slump let me average down significantly.
    And on this down day...while waiting for the tsunami to roll up the estuary....I am finally in positive territory.
    I bet you are all happy for me !

  2. #242
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    Outperforming the index by over 24% so far this year, some speculation that demand from farmers for more wet shares to take advantage of the high milk prices might be contributing, despite the strong GDT results being poor news for profits, debt reduction and dividends.

  3. #243
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    From the NZX 'Results for Announcement to Market' form -


    Net profit/(loss) from continuing operations $339m (44)%


    Does this mean Fonterra's profits from what they have left were down 44% - jeez
    Last edited by winner69; 17-03-2021 at 08:50 AM.
    When investors are euphoric, they are incapable of recognizing euphoria itself.

  4. #244
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    Quote Originally Posted by winner69 View Post
    From the NZX 'Results for Announcement to Market' form -


    Net profit/(loss) from continuing operations $339m (44)%


    Does this mean Fonterra's profits from what they have left were down 44% - jeez

    Only had a quick look, but you probably want to look at the normalised income statement from continuing operations.

    In HY21 if you add back in the Beingmate impact you get a PBT from continuing operations of 514m.

    In HY20 if you remove all the impairments and gains on sales you get a PBT from continuing operations of 400m.

    Pg 30/31 of income statement.

    I know all the normalisations adjustments are real gains/losses, however the above numbers are probably a more accurate representation of how Fonterra performed in the period. Gross profit slightly higher but still looks to have done better in a comparative sense.

  5. #245
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    Fonterra is still accepting milk from these incompetent foreign owned Aust farms and farm managers - surely unacceptable...

    https://www.smh.com.au/business/comp...06-p57gts.html
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  6. #246
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    From the guy at Hamilton, Hinden Green

    @G_T_Davies
    Pure guess, but the @Fonterra announcement this morning does not sounds like good news for the Fonterra Shareholders Fund...
    When investors are euphoric, they are incapable of recognizing euphoria itself.

  7. #247
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    Quote Originally Posted by winner69 View Post
    From the guy at Hamilton, Hinden Green

    @G_T_Davies
    Pure guess, but the @Fonterra announcement this morning does not sounds like good news for the Fonterra Shareholders Fund...
    Its good news if FCG buy back the FSF units at an incrememt to current sp. However i like having the units as it gives transparency to value and easy trading ability for farmers
    Last edited by Habits; 05-05-2021 at 10:27 AM.

  8. #248
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    My mate miles sent out a very vague email to employees which said it's about a board led consultation /discussion about farmers capital debt /equity ratios and level of non-farmer investment they should be willing to allow..
    Announcement tomorrow halt through to Friday..

    Could be the winding up of the FSF perhaps?

  9. #249
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    Fonterra starts consultation on capital structure options - NZX, New Zealand’s Exchange

    Fonterra starts consultation on capital structure options
    Today Fonterra is starting a consultation process to seek farmer feedback on potential options to change its capital structure that could give farmers greater financial flexibility.
    To allow its farmers to have open conversations and consider all options during consultation, the Co-operative is temporarily capping the size of the Fonterra Shareholders’ Fund (the Fund) by suspending shares in the Fonterra Shareholders’ Market (FSM) from being exchanged into units in the Fund.
    This temporary cap will be effective once the current trading halt is lifted when the market opens tomorrow and will remain throughout the consultation process.
    Chairman Peter McBride says the capital structure review seeks to ensure the sustainability of the Co-operative into the future.
    “The Co-op’s future financial sustainability relies heavily on our ability to maintain a sustainable New Zealand milk supply and protect farmer ownership and control.

    “The decisions we’ve already taken in response to the findings of the review – like temporarily capping the size of the Fund – haven’t been made lightly. We appreciate they will have come as a surprise, but they are necessary to keep all our options open while the Co-op’s farmer shareholders have a free and frank conversation about our capital structure,” says Mr McBride.

    Some of the options the Co-operative is asking its farmers to consider include buying back the Fund. If the temporary cap was not in place, anyone holding ‘dry shares’ – those shares held in excess of the ‘wet share’ requirement linked to milk production – would have been able to exchange them into units in the Fund during consultation. This could have more than doubled the size of the Fund and made the option of buying it back unaffordable in the context of the Co-operative’s current balance sheet targets.
    Capital structure options the Co-op is consulting on
    The Fonterra Board has spent a significant amount of time looking at a wide range of options, including staying with the current structure. Some of the alternative structures they’ve considered include:
    - dual share structures, which would move from the current single Co-operative share to a compulsory supply share and a separate non-compulsory investment share
    - unshared supply structures
    - a traditional nominal share structure
    - a split co-operative model

    All options are explained in the attached booklet, which all Fonterra farmers will be receiving as part of the consultation.
    After its analysis to date, and to help give the conversations with farmers some structure, the Board has put forward a preferred option – a “Reduced Share Standard with either No Fund or a Capped Fund.”
    “We believe the best option for our Co-op is to move to a structure that reduces the number of shares a farmer would be required to have and either removes the Fund or caps it from growing further, to protect farmer ownership and control,” says Mr McBride.
    Under this option, the minimum requirement for farmer owners would be one share for every four kgMS supplied to the Co-op, compared with the current requirement of one share for every kgMS supplied. At the other end of the scale, farmers could hold shares up to a maximum of four times their milk supply. But farmers will be encouraged to share their views on these and other features.

    “This would make it easier for new farmers to join the Co-op and give more flexibility to existing farmers who may want to free up capital or who are working through succession.
      
    “A key outcome of this change is that shares would be bought and sold between farmers in a farmer-only market.

    “I want to be clear that these changes could impact the price at which shares in our Co-op are traded, and there may not be as much liquidity in the market. Ultimately the price for farmers’ shares would be determined by the performance of the Co-op and trading between farmers.
    “We believe this is a more sustainable proposition over the longer term than the alternatives we are confronted with.
    “This is the Board’s current thinking, but we are open minded about adjusting that direction based on farmer feedback on any of the options. We want to hear from as many of our farmers as possible. I strongly encourage all farmers to consider the information provided and participate in the consultation process that started today and continues over the coming months.”
    Why the Co-op is looking at alternative capital structure options
    Fonterra says the environment it is operating in has changed a lot over the last ten years. The Co-operative’s current structure was put in place when milk supply was growing rapidly in New Zealand. It now needs to be prepared for flat or potentially declining milk supply as a result of factors such as climate change impacts, regulatory changes, and alternative land uses.
    “Our Co-op’s financial performance will always be the main determinant of our share of New Zealand milk. But we also know that a more flexible capital structure, that caters for the diversity and different aspirations within our Co-op, would support a sustainable future milk supply. This is critical for us to deliver our strategy, which prioritises New Zealand milk.”
    Fonterra says declining milk volumes or more flexibility for farmers’ shareholding requirements could cause the Fund size to grow significantly. That would mean the thresholds that were put in place to help protect farmer ownership and control could be exceeded within the next few seasons.
    “To stay within the Fund size thresholds, our Co-op would need to take action – such as buying back shares or units or increasing the thresholds to allow a greater degree of external investment. We don’t think either of these are ideal outcomes.
    “Buy-backs create an uncertain demand on our capital, potentially impacting our ability to invest in strategy and growth. Under the scenarios that we’ve modelled, buy-backs could cost shareholders up to $1.2 billion over the next ten seasons.”
    Next steps
    Over the coming months, the Co-operative’s farmers will have the chance to share their views through a series of meetings, webinars and other opportunities – and if the appetite for change remains – the Board will do further work to refine the preferred option or options and have a second round of consultation. If the Board decides to seek change to the Co-operative’s capital structure, it would likely aim for a farmer vote around the time of the Annual Meeting in November and the approval of 75% of votes from voting farmers would be required.
    If the preferred outcome is to buy back the Fund, it would also require the approval of 75% of votes from voting unit holders.
    As some aspects of Fonterra’s current capital structure are reflected in the Dairy Industry Restructuring Act 2001 (DIRA), any vote is likely to be conditional on any necessary changes to legislation being passed. The DIRA enabled Fonterra to be formed so that an efficient co-operative of scale could lead New Zealand into global markets. The value Fonterra creates is returned to regional New Zealand, where it plays a strong role helping to sustain local communities and enhance their wellbeing.

    “I appreciate there is a real sense of optimism in the Co-op with our improving financial performance and how we are travelling generally.

    “But the issues raised through this review need to be addressed early. Waiting for the problem to be at our feet will limit our options and likely increase the cost of addressing them, at the expense of future opportunities for us,” adds Mr McBride.
    Other notes of importance
    • Share Standard compliance obligations for the 2021/22 season are now temporarily on hold for all supplying farmers holding a minimum of 1,000 shares and exiting farmers that are selling shares over three seasons in accordance with the Constitution – until a date to be advised. This is due to the uncertainty around what changes, if any, may occur to the Co-operative’s capital structure. The date for resuming Share Standard compliance obligations will not be earlier than six months after the Co-operative has implemented a new capital structure or made an announcement that the capital structure review is not proceeding for the time being.
    • The formal Compliance Date for the 2021/22 season has been set as 20 April 2022, which is consistent with previous seasons. However, as explained above, farmers holding a minimum of 1,000 shares will not be required to comply with the Share Standard for the 2021/22 season until a date to be advised.
    • Compliance obligations are also temporarily on hold for those farmers who have not yet met their Share Standard compliance obligations for the current 2020/21 season. This is so that no farmers are required to trade for compliance purposes during the temporary cap, until a date to be advised.

    • For contract suppliers, the purchase of units under the Contract Fee for Units Trust will also be put on hold while the temporary cap is in place or until such date as the Board advises.

    • Shares in the FSM still have the same core rights as they did before the temporary cap. This includes rights to receive any dividends.
    • During the temporary cap, the prices for units in the Fund and shares in the FSM may not be as closely aligned as they have been to date.
    • Even if a price difference does emerge, given that no additional shares have been issued, the
    Co-operative’s value on a per share basis has not been diluted.

    • Also, because the compliance obligations for farmers holding at least 1,000 shares have been put on hold, there may be lower levels of trading. However, farmers will still be free to buy and sell shares in the FSM. The market maker, or registered volume provider, that has been active in making bids and offers on a minimum number of shares in the FSM since our current structure was implemented will continue to operate in the FSM, but the share price could move more on small volumes of trading in the FSM.
    • Anyone holding units in the Fund, which may include farmers, will be free to continue buying and selling units on the NZX or ASX given the temporary cap only applies to the exchange of shares in the FSM into units.
    Further information is available at www.fonterra.com/capitalstructure
    Attachments
    • Presentation
    • Consultation Booklet
    • Frequently Asked Questions

    -ENDS-

  10. #250
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    Initial FSF response to Fonterra Capital Structure Review

    6/5/2021, 8:35 amGENERAL6 May 2021

    Initial response of Fonterra Shareholders’ Fund to Fonterra Capital Structure Review

    FSF Management Company Limited, manager of the Fonterra Shareholders’ Fund, notes that Fonterra has announced a consultation process with its farmer owners on Fonterra’s capital structure review. The materials are available from www.fonterra.com/capitalstructure.

    While this consultation process is underway, Fonterra has temporarily capped the size of the Fund by suspending shares in the Fonterra Shareholders’ Market from being exchanged into units in the Fund. As at 4 May 2021, the Fund had approximately 107.2 million units on issue, market capitalisation of around NZD 493 million, and is a constituent in the S&P/NZX 50 index.

    The manager has formed a subcommittee comprising solely its independent directors to consider the implications of the review for unit holders.
    The manager has not been directly involved in Fonterra’s review, or Fonterra’s decision to exercise a discretion Fonterra has under Fonterra’s constitution and related arrangements by applying the temporary cap. However, Fonterra has confidentially briefed the manager subcommittee ahead of its announcement.

    While the consultation is underway FSF units will continue to trade on the NZX and ASX, and FSF units continue to have the same rights to participate in the economic performance of Fonterra.

    Fonterra’s consultation process is expected to take several months. If there are indications of sufficient farmer support, Fonterra aims for a refined proposal to be voted on by Fonterra shareholders at their annual meeting in November 2021. Implementation of a supportive farmer vote is expected to be conditional upon necessary changes to the Dairy Industry Restructuring Act 2001 being passed.

    Fonterra has signalled a preferred option which would see the Fund bought back and removed, or an alternative with the size of the Fund permanently capped. A buyback would require a buyback price to be negotiated between the manager subcommittee and Fonterra, for the manager to make a recommendation to unit holders, and the approval of 75% of votes of voting unit holders at a meeting called for that purpose.

    The manager subcommittee has appointed specialist advisers Simmons Corporate Finance and Chapman Tripp to assist with its deliberations over coming months.

    John Shewan
    Chair
    FSF Management Company Limited
    Manager of the Fonterra Shareholders’ Fund

  11. #251
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    looks like they are still failing to address there capital restraints fully which would enable them to compete in the future fully.

    peak cow not fully addressed only leads to one outcome long term
    bull
    One step ahead of the herd

  12. #252
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    14 years on and still no addressing the implications of an ownership group who won't invest in their cash cow...

  13. #253
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    I don't get this. They seem to be concerned about continued conversion/lack of market for suppliers trying to flog supplier shares. The fund is at max and they close it so more do not convert. Why are there pressures, because "peak" cow and the long run decline for the industry effectively through legislated controls by central and local bodies; ability of farmers to supply other processors(although this is only 20% of market).

    Their answer, let's further limit the buyer pool for these types of securities AND reduce the number suppliers need to hold to supply. Maybe the Board and management need to pose this question to Fonterra's marketing department in this MEMO: If demand for a product is reduced and the supply is increased what are the possible outcomes.

    My answer is they will struggle for a number of years in some alternate universe until the wall separating the 2 universes fall down due to the weight of the sellers leaning on it and the two universes collide with a few confused buyers being swamped by rabid sellers wearing redbands offering free tickets to the rugby(supplied by Silverlake) with every bulk lots of shares.

  14. #254
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    United Nations just released a report saying methane emissions should be the focus on climate change. highlighted agriculture as significant sector to target.

    as i mentioned yesterday peak cow is here. climate change ( 40% of nz emissions are from ag i believe ) , eating habits moving away from meat and dairy , people are drinking less cows milk esp in younger generations etc all lead to the same conclusion this is a sunset industry in its current form.
    bull
    One step ahead of the herd

  15. #255
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    Quote Originally Posted by bull.... View Post
    United Nations just released a report saying methane emissions should be the focus on climate change. highlighted agriculture as significant sector to target.

    as i mentioned yesterday peak cow is here. climate change ( 40% of nz emissions are from ag i believe ) , eating habits moving away from meat and dairy , people are drinking less cows milk esp in younger generations etc all lead to the same conclusion this is a sunset industry in its current form.
    Red meat exports are doing just fine.
    https://sendy.tarawera.co.nz/l/J6oLV...h8PhiJ6bgTP2aA

  16. #256
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    Quote Originally Posted by bull.... View Post
    United Nations just released a report saying methane emissions should be the focus on climate change. highlighted agriculture as significant sector to target.

    as i mentioned yesterday peak cow is here. climate change ( 40% of nz emissions are from ag i believe ) , eating habits moving away from meat and dairy , people are drinking less cows milk esp in younger generations etc all lead to the same conclusion this is a sunset industry in its current form.
    Hahaha, sunset industry yeah right. The UN would be better working out how to stem human population meteoric increase. If they wish to lower cow methane emissions there are ways to do this without killing the cow. And as people need animal proteins in their diets to be healthy the nz ag sector is not shrinking, outputs may shrink or stabilise but not returns eg WMP price keeps rising. I know that the Chinese are going more and more nuts for dairy products fof example.

    These Fonterra changes will not happen immediately, I can see this taking a while. Buying back the units under the guise of farmer control may very well be a smoke screen for wresting back ownership at a time when it is relatively cheap to do so. From the reports I have seen fonterra the company had some innovative and profitable enhancements and products on the way and in the market place.

  17. #257
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    IMHO Fonterra is its own worst enemy and survives in spite of its self !

    IMO A very lazy company !

    IMO It is in the trouble it is because of its self , ie it should not be paying more than 60-70% of the milk solid earnings that will deal with its capital issue and solve all of its other current issues but dont hold your breath so farmers are their one worst enemy, now the circle is complete.

  18. #258
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    Its called lets kick the ag sector in the guts again BULL.
    What about transport ?
    "
    New Zealand greenhouse gas emissions have been relatively unchanged since 2005. In 2018 New Zealand’s gross greenhouse gas (GHG) emissions were 78.9 million tonnes of CO2-e, 24.0 percent higher than 1990 and 1.0 percent lower than 2017.

    In 2018:

    Gross emissions were mainly made up of carbon dioxide (44.5 percent), methane (43.5 percent), and nitrous oxide (9.6 percent).

    Carbon dioxide emissions were mainly produced by transport (47.0 percent), manufacturing industries and construction (17.9 percent), and public electricity and heat production (9.4 percent).

    Emissions from transport were up 2.3 percent from 2017 and up 89.7 percent from 1990. Transport emissions were mainly made up by road vehicle emissions (90.7 percent) and domestic aviation (6.7 percent).
    Road transportation emissions in 2018 were up 2.0 percent from 2017 and up 101.6 percent from 1990. They made up 42.6 percent of all carbon dioxide emissions in 2018.
    Domestic aviation emissions in 2018 were up 12.0 percent from 2017 and up 17.7 percent from 1990. They made up 3.2 percent of all carbon dioxide emissions in 2018.
    Emissions from manufacturing industries and construction were down 9.9 percent from 2017 and up 34.2 percent from 1990. They made up 17.9 percent of all carbon dioxide emissions in 2018.
    Emissions from public electricity and heat production were down 8.4 percent from 2017, down 63.3 percent from 2005, and down 5.5 percent from 1990. This reflects our high proportion of electricity generation from renewable sources. In 2018, the share of electricity generated from renewable energy sources in New Zealand was 84 percent (Ministry of Business, Innovation & Employment, 2019)."

    https://www.stats.govt.nz/indicators...-gas-emissions

    "In 2018:

    Gross emissions were mainly made up of carbon dioxide (44.5 percent), methane (43.5 percent), and nitrous oxide (9.6 percent).

    Carbon dioxide emissions were mainly produced by transport (47.0 percent), manufacturing industries and construction (17.9 percent), and public electricity and heat production (9.4 percent).

    Emissions from transport were up 2.3 percent from 2017 and up 89.7 percent from 1990. Transport emissions were mainly made up by road vehicle emissions (90.7 percent) and domestic aviation (6.7 percent).
    Road transportation emissions in 2018 were up 2.0 percent from 2017 and up 101.6 percent from 1990. They made up 42.6 percent of all carbon dioxide emissions in 2018.
    Domestic aviation emissions in 2018 were up 12.0 percent from 2017 and up 17.7 percent from 1990. They made up 3.2 percent of all carbon dioxide emissions in 2018."

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