Confirmation of an earlier dividend payment is "good news'' for Fonterra suppliers, North Otago Federated Farmers dairy chairman Lyndon Strang says.
The dairy co-operative signalled the move, to help farmer cash-flows, when it announced its half-year profit results in March and it confirmed it yesterday.
A solid performance during the nine months to April 30 enabled the company to declare the 10c per share dividend. Payment will be made on June 7, chairman John Wilson said.
The earlier payment met Fonterra's goal of getting cash to farmers earlier in winter, when they needed it, Mr Wilson said.
It intended declaring another 10c per share dividend in August, subject to financial performance continuing to support the current forecast earnings per share range of 45c to 55c. Its forecast dividend was 40c for the year.
Although the milk supply and demand imbalance continued to affect global milk prices and Fonterra's forecast farm-gate milk price, the business was delivering on strategy and had maintained the good performance levels seen in the first six months of the financial year, Mr Wilson said.
Mr Strang said there continued to be high stress levels in the dairy farming community, particularly among sharemilkers and those more indebted, and that was not going to go away. It was important that continued to be acknowledged and people received support.
Everyone was looking to next season, hoping, in areas such as North Otago, for improved weather conditions and an improved payout, he said.
Fonterra will provide its opening 2016-17 season forecast farmgate milk price at the end of this month.
Looking ahead to the final three months of Fonterra's financial year, the company's good operating performance was expected to continue, Mr Wilson said.
Its earnings per share range reflected assumptions about normal effect of end-of-season milk production on New Zealand ingredients earnings, timing of completion of announced business sales in Australia, and no further geopolitical deterioration in Venezuela and Brazil.
Ongoing financial discipline and the business' performance were resulting in strong cash flow and it was on target to reduce gearing to between 40% and 45% by the end of the year.
ASB expects dairy prices to rise modestly in this week's GlobalDairyTrade auction, as falling volumes are likely to support prices. Futures pricing suggested a whole milk powder price rise of between 2% and 4%.
Fonterra's latest Global Dairy Update showed its milk collection across New Zealand in April was 3% lower than April last season.
Lower milk collections were largely a result of the low milk price environment, as farmers reduced stocking rates and supplementary feeding to reduce costs.
Favourable weather conditions across many dairying regions were supporting late season milk production.
The 2015-16 season forecast has been revised to 1558million kg/ms, down 3% on the previous season.
North Island milk collection in April reached 61million kg/ms, 6% behind April last season, while South Island milk collection in April reached 51million kg/ms, 1% above April last season.
Milk collection in Australia continued to decrease below the same period last season as a result of unfavourable pasture growth, due to dry conditions across most dairy regions, particularly Victoria.
