Latest / Best of Business / Jamie Mackay: The Country host on Fonterra posting an improved financial result

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Jamie Mackay: The Country host on Fonterra posting an improved financial result · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 1: The Rural Report on hither do for see Allen Drive.
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  Speaker 2: Jamie mckaie hosted the Country with Me evening. Jamie. Good Ay, Ryan,
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  Speaker 2: great result for Fonterra today.
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  Speaker 3: Yeah, fantastic result. And I heard you talking to Miles
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  Speaker 3: Hurrel just after five o'clock. I chatted to him on
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  Speaker 3: my show today and yeah, look, it's a great result.
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  Speaker 3: Literally every number is good. But I just did a
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  Speaker 3: wee bit of interesting homework around the Fonterra co op
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  Speaker 3: share price. Now, these are the shares that the farmers
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  Speaker 3: have to buy to supply milk to Fonterra. They finished
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  Speaker 3: the day trading at six dollars ten They were up
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  Speaker 3: ten cents this time. A year ago they were three
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  Speaker 3: dollars seventy five. But if you go back to their
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  Speaker 3: real low point, all time low seventeenth of November twenty
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  Speaker 3: twenty three, less than two years ago, they were two
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  Speaker 3: dollars and three cents, meaning in less than two years,
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  Speaker 3: the price of Fonterra co op shares have gone up
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  Speaker 3: by three hundred percent, or exactly three times. Interestingly, when
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  Speaker 3: I went back further in time, the high of all
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  Speaker 3: time for Fonterra shares was way back in May twenty
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  Speaker 3: thirteen when they were eight dollars. So I know there's
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  Speaker 3: a big vote coming up on October the thirtieth for
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  Speaker 3: Fonterira Farmer shareholders. They have to make their mind up
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  Speaker 3: whether they take the three point two billion dollars from
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  Speaker 3: the four point two billion they're going to get from
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  Speaker 3: the sale or Fonterra is going to get from the
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  Speaker 3: sale of lock Talis. But I think pretty much it's
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  Speaker 3: a done deal. That's what I'm hearing anyhow, and some
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  Speaker 3: of that money will be used to repay shares. Perhaps
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  Speaker 3: some of them Ryan might have even bought their shares
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  Speaker 3: and May twenty thirteen at eight dollars, so who knows.
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  Speaker 3: But for those who bought them a couple of years ago, oh,
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  Speaker 3: November twenty twenty three, they've done very well.
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  Speaker 4: Indeed, it was interesting reading the results today and kind
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  Speaker 4: of having a harm moment about the fact that their
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  Speaker 4: profit was actually down slightly, But then that's because their
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  Speaker 4: costs are up because they're buying the milk, which is
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  Speaker 4: obviously at very high prices.
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  Speaker 3: Yeah, Well, they don't always make more money when the
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  Speaker 3: milk price is up because their ingredient is more. I
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  Speaker 3: think some of that profit story. They're also paying a
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  Speaker 3: week at more tax. But a number that Miles didn't
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  Speaker 3: mention to you met. We've got the milk price at
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  Speaker 3: ten dollars, sixteen, we've got the fore cast milk price
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  Speaker 3: at ten dollars. But the dividend, Okay, that's the yield
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  Speaker 3: they get on their shares. So you buy a share today,
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  Speaker 3: you're going to on this year's on this year's dividend,
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  Speaker 3: get a fifty seven cent per share dividend fully imputed.
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  Speaker 3: That means it's tax paid. It's the equivalent to about
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  Speaker 3: seventy nine cents, and that's up from about fifty five
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  Speaker 3: cents yesterday. So that is a very good yield on
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  Speaker 3: your Fonterra share. If you're a farmer supplying Fonterra, you
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  Speaker 3: and I Ryan, and you're paid a lot more than
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  Speaker 3: I am because you're a star at z B. We
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  Speaker 3: could go onto the sheer market and buy Fonterra shares
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  Speaker 3: and the shareholders fund today, Ryan, we should have bought
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  Speaker 3: them yesterday. They went from seven forty five up to
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  Speaker 3: seven ninety, up forty five cents, an increase on six percent.
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  Speaker 3: So the market obviously like the Fonterra results today.
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  Speaker 2: Absolutely what's not to like? Hey, what's going on? Strong
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  Speaker 2: wool actually worth something all of a sudden.
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  Speaker 3: Yeah, suck, horror, Look this is they Look. The arable
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  Speaker 3: farmers are having a wee bit a tough time, and
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  Speaker 3: some of the horticulture farmers, like the avocado growers, having
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  Speaker 3: a bit of a battle as well in some cases.
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  Speaker 3: But generally across the board, things are really good. Red
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  Speaker 3: meat's good, dairries really good, Kiwi fruit's good. Apples are good.
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  Speaker 3: Strong wool has been, you know, has been the naughty
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  Speaker 3: child if you want of primary sector returns, it's been
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  Speaker 3: worth literally nothing. It's cost you more to share your
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  Speaker 3: sheep than you get for your wall check. But today
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  Speaker 3: at the South Island sale, the strong wall indicator was
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  Speaker 3: up forty six cents. They had a ninety eight percent
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  Speaker 3: clearance And some of the commentary was interesting from a
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  Speaker 3: guy by the name of Dave Burrett who's the South
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  Speaker 3: Island auction manager for PGG Rights, and he said significant
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  Speaker 3: global shortages of all wall types has prompted levels of
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  Speaker 3: demand at the christ Church Wall exchange, not seen in
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  Speaker 3: a generation. Bidding at times was extreme, with buyers having
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  Speaker 3: to fill immediate orders into China. A major Australian based
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  Speaker 3: wall exporting company dominated the floor for most of the
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  Speaker 3: fine wall, which has been going okay. It's been the
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  Speaker 3: strong crossfed wall that's been the issue. So happy days
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  Speaker 3: for farming today.
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  Speaker 4: Ryan absolutely, although can be deceiving parts of the country
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  Speaker 4: dealing with the green drought.
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  Speaker 3: Well that's the beauty of being a farmer. You can't
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  Speaker 3: control the weather, you can't control commodity prices, you can't
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  Speaker 3: control exchange rates. They're all out of your control. But yeah,
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  Speaker 3: look it's been a bit of a tough September for many.
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  Speaker 3: It's been cold and wet down south where I am
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  Speaker 3: on the east coast of both islands, like almost from
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  Speaker 3: Dunedin north it's getting quite dry. Areas like one or
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  Speaker 3: two Taranaki, especially one or two are getting very dry.
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  Speaker 3: And it's also been cold, I mean, hit by a
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  Speaker 3: lot of cold southwesterlyes. So what they're kind of having
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  Speaker 3: in some places, especially in the North Island, is a
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  Speaker 3: bit of a green drought. Other parts of the country,
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  Speaker 3: the further north you go have had more rain, but
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  Speaker 3: I just think that's farming. You just got to take
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  Speaker 3: what the weather gods give.
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  Speaker 4: You, absolutely and hope for the best. Jamie, Thank you.
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  Speaker 4: Jamie mckaye hosted the Country with Us.
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