What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
According to preliminary results, the co-operative has had a strong first half and, alongside the strength in earnings, it is forecasting a 2024/25 Farmgate Milk Price midpoint of $10/kgMS.
In addition, the co-operative has revised its forecast milk collections up to 1,510 million kgMS, following favourable weather conditions.
Miles Hurrell, Fonterra chief executive, says that as the co-operative prepares its 2025 interim results, the momentum from the first quarter appears to have been maintained.
“Further to this, good pasture growth across most of New Zealand to date has meant our forecast collections for the season are up,” Hurrell says.
He says Fonterra’s earnings momentum is driven by strong demand across its sales channels.
“Subject to audit, our first half accounts indicate our full year forecast earnings for FY25 will be in the upper half of the 40-60 cents per share range,” he adds.
“Fonterra’s earnings and the forecast Farmgate Milk Price have both benefitted from solid demand for our high value Ingredients products, and our sales book is well contracted for the season.
“Considering these factors, we expect to be in a position to pay a strong interim dividend. Our revised dividend policy released in September 2024 is 60-80% of full year earnings, with up to 50% of full year dividend to be paid at interims,” Hurrell concludes.
