Fonterra says it won't pay a dividend this year; expects FY loss of up to $675m
By Rebecca Howard
Aug. 12 (BusinessDesk) - Fonterra Cooperative Group said it expects to report a full-year loss of $590 million to $675 million and that it won't pay a dividend as it slashes the carrying value of assets around the world.
Chair John Monaghan said in light of the significant write-downs "we have made the call to not pay a dividend for FY19," for the year ending July 31. While the underlying performance is in line with the latest earnings guidance, "we cannot ignore the reported loss," he said.
Fonterra reported its first net loss attributable to shareholders of $221 million in the July 2018 year, and paid annual dividends of 10 cents per share.
Chief executive Miles Hurrell said after a full review of the business over the past year, "it has become clear that Fonterra needs to reduce the carrying value of several of its assets and take account of other one-off accounting adjustments, which total approximately $820 million to $860 million."
He said while the FY19 underlying earnings are within current guidance of 10-15 cents per share. However, "when you take into consideration these likely write-downs, we expect to make a reported loss of $590-$675 million this year, which is a 37 to 42 cent loss per share."
Units of the Fonterra Shareholders' Fund and the farmer-owned Fonterra shares both closed at $3.76 on Friday, and have dropped 19 percent so far this year.
Regarding the specific write-downs, Hurrell said DPA Brazil will be impaired by approximately $200 million due to economic conditions in Brazil. The carrying value of the China Farms will be impaired by approximately $200 million due to the slower than expected operating performance.
In the New Zealand consumer business, the combined impact of operational challenges and a slower than planned recovery in market share means a write-down of approximately $200 million. In Australia, a one-off impact of approximately $70 million includes the previously announced $50 million on the soon-to-be shuttered Dennington factory.