Fonterra director and veteran capital markets executive Scott St John has left the board of the shareholder fund’s manager, the same day the units plunged to a new low.
A notice to the Companies Office last night noted St John ceased being a director of FSF Management Co, the manager of the dual-listed Fonterra Shareholders’ Fund, which gives investors exposure to the cooperative’s earnings stream. He is still a director of Fonterra.
The fund’s units closed at a record low $4.17 yesterday, slumping 7.3 percent after Fonterra cut its earnings guidance and ditched its first-half dividend. Any return at the end of the financial year will depend on the cooperative’s annual earnings and balance sheet at the end of July. Fonterra’s board is reviewing its dividend policy.
At the same time, Fonterra’s board raised its forecast payout to the farmer-shareholders who supply the cooperative, estimating a payment of $6.30-6.60 per kilogram of milk solids. That’s up from an earlier forecast of $6-6.30/kgMS.
The increased payout to farmers was put down to growing demand from Asia helping drive up global prices, which was also the reason why the earnings forecast was lowered. That tension pitting investors’ interests against suppliers has seen the fund’s units slump from as high as $8.09 in May 2013, before confidence was dented by the false botulism scare and a slump in the global price prompted Fonterra to offer favourable loans to help farmers through a lean period.
Fonterra announced St John’s exit from the manager’s board to the ASX earlier in the day, saying he would be replaced by director Andrew Macfarlane, who joined the cooperative’s board in 2017. The units dropped 6.4 percent to A$3.98 on the ASX, having dropped as low as A$3.80.
No statement on St John’s exit was made to the NZX, Fonterra’s home domicile.
St John joined the Fonterra board in 2016, with the announcement touting his financial skills after 30 years in funds management and securities transactions. That was the same year he retired as chief executive of First NZ Capital. He was appointed to the FSF Management board at the same time.
First NZ was a co-lead manager with Forsyth Barr and Macquarie Capital in the fund’s 2012 IPO. That float was seen as a massive success at the time, with the unit’s sold at $5.50 apiece. They climbed as high as 26 percent on its first day of trading before settling at $6.85.