1 Aug 2013

Fonterra changes dividend policy

8:19 am on 1 August 2013

Fonterra is changing its policy of paying a percentage of adjusted net profit in dividends to a more qualitative approach.

On Wednesday, Fonterra announced an estimated dividend of 32 cents per share for 2014, the same amount that it is expected to pay for the 2013 financial year.

Fonterra chairman John Wilson says instead of paying out 65% - 75% of adjusted net profit in dividends, the dairy giant will move to a more qualitative approach to setting the dividend.

He says the challenge for the board is to give the most transparent information it can to its shareholders and unit holders.

Mr Wilson says year-to-year volatility is significant so when the board makes its final decision, it will be mindful not only of the net tax after profit for a given year but also consider forecasts for future years.

He says it is very volatile because its weather-dependant and global economic drivers have a big impact.

Units in Fonterra Shareholders' Fund, which non-dairy farmers can own, fell 19 cents to $7.30 after Fonterra's announcement.