Jamie McKay: The Country host on Fonterra result, free trade deal with India, farmers affected by weather

On top of a forecast $10 milk price (Milk Price range narrows: NZ $9.70 - $10.30 per kgMS), Fonterra Ltd has increased its FY25 full year earnings guidance from 40-60 cents per share to 55-75 cents per share.

Fonterra released its FY25 interim results today. The Co-op’s dividend policy is 60-80% of full year earnings, with up to 50% of the full year dividend to be paid at interims.

That's a possible range of 33 to 60 cents.

The Country host Jamie McKay talks to Tim Beveridge about Fonterra's results. 

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Episode Transcript

Speaker 1 (00:00):
Tim Beverage and for Ryan Bridge now the host of
the Country Jamie McCay.

Speaker 2 (00:03):
Good evening, good Eton, nice to chat.

Speaker 1 (00:05):
Yeah you too. Hey, what's your take on the Fonterra result.

Speaker 2 (00:09):
Well, I heard you talking to Miles. I hit him
on my show today. Look, I think the one thing
that it's worth emphasizing, and that is, you know, not
the milk price. It's pretty much locked and loaded at
ten dollars. They've narrowed the band down there, but the dividend.
So last week Fonterra came out and said it's shifting
its earning guidance per share to fifty five to seventy

(00:32):
five cents per share. From that, their dividend policy is
to pay sixty to eighty percent of that as a dividend. Now,
I did the mat on this one off on the
back of the envelope sort of mats. But I think
I'm not a mile away. This is a possible range
tim of thirty three to sixty cents per share as
a dividend. But the big difference is, as opposed to

(00:55):
other years, this is fully imputed, so the tax is
paid on it. This is a tax paid payment to
the farmers. Now if we were right at the top
of that band and Fonterra is performing pretty well, it's
sixty cents. They're shares were trading at about five bucks
when I looked the mid afternoon. Haven't lockd since, but
sixty cents tax paid on a five dollars share is

(01:20):
like a twelve percent tax paid yield or dividend. So
that's a very good return on top of your milk
price for the Fonterra farmers. The other interesting one that
he didn't mention for your listeners was the forecast milk
collections one point five one zero million kilograms of milk solids.
That's up two point seven percent across the board in

(01:42):
New Zealand despite the North Island drought. And all it means,
tim is that the farmers are doing the maths on
this one. They're running out of grass. It's getting very dry,
and like sawai kato taranaki, those sort of areas, they're
pumping it in the front end of the cow and
out the other end comes some poop and some milk
and tween times and that is just a mathematical equation.

(02:02):
It's working. So the farmers are feeding supplements to milk
their cows at ten bucks.

Speaker 1 (02:08):
Hey, just quickly on the India possibility of a trade deal.
The government is sounding quite bullish about that, and of
course the dairies. The big question, are you quietly sort
of optimistic about this?

Speaker 2 (02:21):
Well, I mean, India is the biggest milk producer in
the world. It produces, off the top of my head,
twenty four percent of the world's milk production. They're aiming
to get that up to thirty percent by twenty thirty.
I can't see them wanting to do a free trade
This is just me being slightly pessimistic a free trade
agreement on milk. But I think the real advantage for
US would be to get likes of a free trade

(02:44):
agreement on lamb. The Aussies have got one at the
moment that would be great for US. Beefs a bit
awkward with the sacred cow sort of thing happening in India.
And the other one is horticultures. Espree have just come
out with their new season forecasts. They've got a record crop,
really good payout. If we could get a key with
fruit and our apples into India, Tara free one point

(03:05):
four billion miles to chill on them. We would be
cooking with gas.

Speaker 3 (03:09):
Gosh, that would be exciting, wouldn't it. Anyway, Hey, Jamie,
thanks so much for your time. That's Jamie. He needs
no introduction. It's probably me interesting needs to introduce myself.
He's the host of the Country. I'm Tim Beverage. And
in case you're reckon listening to that voicecound that doesn't
sound like Ryan. Who's in for Heather? Well, it's Tim
and for Ryan and for Heather.

Speaker 1 (03:26):
For more from Heather Duplessy Allen Drive, Listen live to
news talks.

Speaker 3 (03:29):
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