Fonterra's positive assessment of new capital structure suggests that it has been successful in achieving its intended goals.

Two months ago, Fonterra introduced its new capital structure, and according to the dairy co-op, it has been functioning well thus far. Neal Beaumont, the chief financial officer, stated that there is a balanced presence of buyers and sellers, resulting in effective price discovery. Beaumont also mentioned that Fonterra has not needed to provide significant liquidity support, indicating that the market has been operating independently. The new structure was implemented to ensure a sustainable milk supply in New Zealand while protecting farmer ownership and control. Under the revised structure, farmers now need to hold one share for every three kilograms of milk solids (kgMS) instead of one share for every kgMS. Additionally, farmers have the option to hold up to four times their milk supply if they desire more shares. Fonterra's shares have experienced an increase, with strong third-quarter results contributing to a 3.8% rise. The co-op reported a profit after tax of $1.3 billion, representing 81 cents per share, an increase of $854 million compared to the same period last year. Fonterra has adjusted its full-year earnings forecast to 65-80 cents per share, indicating the potential for a "strong" full-year dividend. The co-op remains committed to delivering a robust dividend in line with its policy. However, Fonterra has narrowed its forecast range for the current season's farmgate milk price and announced a lower price for the upcoming season starting on June 1. Despite this adjustment, ANZ agri economist Susan Kilsby believes the lower price will have a reasonably neutral impact on farmers, considering the higher earnings forecast, improved cash flow from an advance rate lift, and the expectation of an earlier payment for a one-off dividend. Fonterra plans to bring forward the payment date for its proposed capital return, and ASB economist Nathaniel Keall expressed a cautious outlook, expecting a milk price at or below the lower end of Fonterra's forecast range due to concerns about the Chinese economy.

based on information provided by businessdesk.co.nz