Big dairy results fortnight kicks off with Synlait

Media Release

24 September 2013

Big dairy results fortnight kicks off with Synlait

In a big results fortnight for most dairy farmers and the New Zealand economy, listed milk processor Synlait has started the ball rolling with a net after tax profit for 2012/2013, which was ahead of its prospective financial information forecast. Fonterra Cooperative Group releases its 2012/13 results tomorrow with the other two cooperatives due to follow next week.

“For supplier-shareholders of Fonterra, Synlait, Tatua and Westland, this is going to be a huge fortnight, given Open Country Dairy has already paid its suppliers for the 2012/13 season,” says Andrew Hoggard, Federated Farmers Dairy Vice-Chairperson.

“I would add for New Zealand, too, since this relates directly to over a quarter of our country’s merchandise exports.

“So first out of the blocks is Synlait. Synlait enjoyed impressive revenue growth, which was up 11.5 percent over the previous season to $420 million. Milk volumes also grew by 2.8 million kilograms of milksolids (kg/MS).

“Given Fonterra is forecasting a farmgate milk price for this season of $5.80 kg/MS, Synlait has topped that with a total average milk price to suppliers of $5.89 kg/MS. Due to ‘DIRA Milk’ taken by Tatua and Westland, they will need to digest Fonterra’s final numbers before releasing their results next week.

“Of course, what farmers are hoping to see in these results is minimal disruption stemming from a tumultuous August.

“There’s another dimension from the numbers released by Synlait that won’t be lost on North Island farmers. It is the role irrigation is playing in production.

“The recent wind-storm notwithstanding, when the irrigators are running so does the New Zealand economy.

“Irrigation has delivered consistent milk volumes in the South Island while the lack of irrigation and water storage in the North Island can be seen in the trade deficit for the June quarter. This, after all, saw a near $500 million hole punched into meat and dairy exports due to the drought.

“That’s why many farmers will be pleased to see Crown Irrigation Investments Limited recruiting Murray Gribben to be its first chief executive. There’s recognition that water storage and irrigation will play a huge economic and environmental role.

“The impact of the 2013 drought, on the North Island especially, may see Fonterra miss its prospectus forecast for the Fonterra Shareholders Fund. It is why Fonterra’s supplier-shareholders will not be expecting any surprises when the 2012/13 results are released tomorrow.

“Of course Fonterra’s forecast Farmgate Milk Price for the 2013/2014 season going to $8.30 kg/.MS is amazing,” Mr Hoggard concluded.

Tatua Cooperative Group is expected to release its 2012/13 results on 30 September, while Westland Milk Products is expected to publicly release 2012/13 results on 1 October. Privately held Open Country Dairy changed to a new payout system in 2012 and its suppliers have already been paid out for the 2012/13 season.

ENDS

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