Fonterra shareholders want more info on profits

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The Fonterra Shareholders' Council has asked the company to provide more information about what it will do with the profits of extra funding it receives from shareholders.

Fonterra's 10,700 shareholder-milk suppliers will vote at the annual meeting on November 18 on a three-stage restructuring which could raise as much as $900 million.

Council chairman Blue Read said yesterday the proposal to allow suppliers to buy an extra 20 per cent of shares above their mandatory purchase based on their milk production should be treated like any other investment offer.

"They have a right to expect full information as to what percentage of the business may be distributed as profits and dividends and what may be held onto as a retention for further investment. Farmers need to be pretty clear about what they can expect to receive."

He said Fonterra had said it was "definitely going to be looking at it".

The council released its annual report on Monday, giving Fonterra top marks for its handling of the global economic crisis.

"Fonterra took early and pre-emptive action to secure funding in the international marketplace and farmers made a significant net capital contribution through share purchases," Read said. "Fonterra's investment in downstream activities provided a buffer to the reduction in commodity prices."

Fonterra's final payout of $5.20 a kilogram of milksolids was a good outcome given the extremely difficult business environment.

A further focus for the council was the milk price, which determined the split between Fonterra's price for farm gate milk and the distributable profit.

"Integrity of the milk price is pivotal for farmers' confidence. We support the implementation of the new milk price, but want to be sure that the model is robust and the governance is appropriate. Work in this area is on going."

- © Fairfax NZ News