Tatua eclipses Fonterra's milksolids payout

Waikato dairy company Tatua will pay its farmers $7.40 per kilogram of milksolids for the recently-ended 2012-2013 season, eclipsing Fonterra's $6.16.

In addition, Tatua directors chose to retain pretax $1.17/kg, meaning that if they had decided to pay it out, the company's farmers would have received $8.57/kg.

The company's specialised product mix of caseinate and anhydrous milk fat proved a favourable earning combination.

However, it is warning the current 2013-2014 season will be more challenging, with this mix now earning lower returns than milk powder.

"If this continues for the balance of the year it will be more difficult for us to match the financial performance of the milk powder companies. It is still early days, but the signs are there that 2013-2014 will be a less competitive year for Tatua."

Tatua's revenue for the 2012-2013 year was $229.7 million, up from last year's $228.1m, but earnings were down at $107.4m, compared to last year's $109m.

The company's gearing ratio of debt divided by debt plus equity fell to 28 per cent from 34 per cent in 2011-2012.

Milk supply from Tatua's 108 suppliers was a drought-affected 12.5 million kilograms of milk solids, compared to 13.2 million the previous year.

The company said the $1.17/kg retention would ensure the 99-year-old business has enough financial muscle to invest in new plant and equipment to support its strategy of growing its specialised, added-value operations.