New Zealand dairy company Fonterra Co-Operative Group Ltd. on Wednesday said its payout to farmer shareholders will fall by 19 per cent as net revenues for the 2011-12 season had remained flat at $19.8 billion.
The world's biggest dairy processor placed the final payout to NZ$6.40 ($5.30) a kilo of milk solids for the 2012 season, lower than the NZ$6.45 - NZ$6.55 a kg forecast it gave in May, as well as to the NZ$8.25 a kg last year.
New Zealand's largest company likewise confirmed shareholders can expect an even lower payout for 2013.
Outgoing Fonterra Chairman Henry van der Heyden said the massive worldwide dairy production in 2012 prompted the company's figures to shake up.
"Global dairy demand held up reasonably well but this ocean of milk obviously impacted on global commodity prices, with the GlobalDairyTrade index reaching its lowest value in 34 months in May," he said.
Since 2011, the world experienced an 11 per cent jump in milk production resulting since to oversupply, eventually impacting prices in Fonterra's fortnightly auctions to slide to a 2 1/2-year low in May.
"This contributed to a lower farmgate milk price in the 2012 year. However, the impact of this decline on overall earnings for farmers has been eased a little by the much higher volumes of milk they produced."
Fonterra's net profit in the fiscal year ended July 31 hit NZ$624 million (US$512.7 million).
Theo Spierings, Fonterra chief executive, however, said the 2010-11 total was enhanced by NZ$202 million tax credits, which were not repeated in 2011-12.
"Excluding those credits, Fonterra's net profit after tax improved by 10 per cent," he said in a statement.
The co-op is owned by 10,500 dairy farmers. It accounts for 7 per cent of New Zealand's GDP, including a quarter of its exports, as well as controls a third of the world's dairy exports.
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