Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — H1 2025 Earnings Presentation
40 slides from Fonterra Co-operative's earnings presentation, Mar 20, 2025
Slide 1: Fonterra Co-operative Group 2025 Interim Results
Fonterra Co-operative Group 2025 Interim Results
Slide 2: Content
Content Results overview 3-6 Macro environment & Outlook 7-13 Strategic focus 14-20 Additional financial information 21-34 Appendix 35-40
Slide 3: 2025 Interim Results Summary
2025 Interim Results Summary Operating profit • Strong milk flows on-farm and strengthening demand across all three product channels are supporting: $1,107m – narrowed 2024/25 Farmgate Milk Price range to $9.70 – $10.30 per kgMS, from $9.50 - $10.50 per kgMS from 953m – increased FY25 earnings ran
Slide 4: Higher profit after tax driven by improved operating performance
Higher profit after tax driven by improved operating performance FY24 H1 to FY25 H1 profit after tax ($ million) • $52m due to upgrading our • Ingredients gross Enterprise Resource • $103m increase in profit up due to Planning (ERP) system tax expense improved gross margins • Costs associated with •
Slide 5: Operating profit driven by strong performance in Ingredients
Operating profit driven by strong performance in Ingredients FY24 H1 to FY25 H1 continuing operations operating profit ($ million) Channel performance drivers net $113m Ingredients Foodservice Consumer $229m $112m $4m 300 (33) 49 (131) (30) 38 (26) (16) 1,099 986 (38) FY24 Volume Margin Oper
Slide 6: Return on capital
Return on capital Return on Capital by channel1 Total Group Return on Capital Ingredients ($ million) 2023 2024 2025 For 12-month period to 31 January Average capital employed 8,092 7,855 7,509 13.4% 11.0% Net operating profit after tax 2 1,043 1,004 829 10.2% 8.6% from 12.8% Return on Capital (%)
Slide 7: Macro Environment & Outlook
Macro Environment & Outlook
Slide 8: Improving supply and strong demand from key importing regions
Improving supply and strong demand from key US EU China importing regions 3-month 0.2% 3-month 0.8% 3-month 3.9% 12-month 0.1% 12-month 0.6% 12-month 8.8% • Dairy market conditions remain favourable: – Continued strong demand from key import regions, particularly Southeast Asia – Chinese
Slide 9: Monthly milk prices driven by strengthening demand for Reference Products
Monthly milk prices driven by strengthening Monthly Milk Prices ($ per kgMS) demand for $11 Reference Products • Value of milk has materially increased season on Indicative monthly milk season as Reference product prices increase $10 prices for 2024/25 season forecast midpoint of $10.00 • The weight
Slide 10: Reference portfolio value higher due to WMP and butter demand
Reference portfolio value higher due to WMP and butter demand Fonterra Revenue Reference and Non-Reference Q1 Q2 H1 Q1 Q2 H1 Price Relativities Average Non-Reference price 4,333 4,218 4,272 Average Non-Reference price 4,398 4,534 4,473 (USD/MT) Average Reference price 3,298 3,055 3,131 Average Refer
Slide 11: New Zealand-sourced Ingredients' product mix
New Zealand-sourced Ingredients’ product mix 2024 2025 Change Sales Volume (‘000 MT) • Favourable product mix shift between Reference and Non-Reference Reference Products 872 844 (3)% portfolio, 17,000 MT more into higher value Non-Reference products and 28,000 MT less Reference products Non-Referen
Slide 12: Breakdown of milk solids allocated to product groups
Breakdown of milk solids allocated to product groups Whole Milk Powder: NZ milk solids manufactured (kgMS millions) For 6 months to 31 January • Strong demand for WMP across all regions, particularly China as local supply rebalances • Small increase in milk solids allocated due to better prices and
Slide 13: FY25 outlook
FY25 outlook Forecast Farmgate Milk Price Forecast earnings $9.70 – $10.30 55 – 75 cents per kgMS per share The range has narrowed reflecting: The forecast range reflects: • well contracted sales book • Foodservice and Consumer margins in H2 are expected to be higher than prior year H2, but down on
Slide 14: Strategic Focus
Strategic Focus Key business drivers
Slide 15: Deliver strongest farmer offering
Deliver strongest farmer offering Fonterra supplier base and milk collections Full season figures • The Co-op continues to adapt its commercial offering to be as competitive 79.0% 79.1% 79.0% as possible 78.1% ~ 78.0% • This season we adjusted the Advance Rate Schedule to get cash to farmer sharehol
Slide 16: Unleash our Ingredients engine
Unleash our Ingredients engine Improved mix as solids shifted to high value ingredients Strategy in Action: Studholme Expansion Full financial year figures 16.3% • $75m investment into high-value proteins 10.2% 11.0%1 9.0% • Expansion in manufacturing capacity of higher value functional proteins ena
Slide 17: Keep momentum in Foodservice
Keep momentum in Foodservice Continued Foodservice growth driving higher milk allocation Strategy in Action: Edendale Expansion Full financial year figures • $150m investment in a new UHT plant 15.7% 19.6% 1 11.7% • Unlocking up to 20m kgMS additional processing capacity in the 5.5% Foodservice port
Slide 18: Progressing Consumer
Progressing Consumer Divestment update Increased milk allocation and sales through Consumer Full financial year figures • In November 2024 Fonterra confirmed it was pursuing a potential divestment of the Consumer channel via either an IPO or Trade Sale • The divestment process continues alongside Fo
Slide 19: FY25 full year forecast efficiency metrics
FY25 full year forecast efficiency metrics Cash operating expenses Core Operations manufacturing cash costs ($/kgMS) ($/kgMS) $2.78 $2.64 $2.63 $2.54 $2.58 $1.45 $2.63 $2.63 $1.39 $2.58 $1.37 $1.32 $1.31 $2.30 $1.36 $1.35 $1.30 $2.11 $1.17 $1.10 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 Infl
Slide 20: Capital investments to support resilience and growth
Capital investments to support resilience and growth Capital invested Breakdown of essential capital expenditure1 ~$700m ~1,000 1,000 980 Full financial year figures ($ million) Full financial year figures ($ million) 10% 621 20% 747 720 20% 534 558 79 152 608 617 106 466 20% 47 121 173 30 56 63 53
Slide 21: Additional Financial Information
Additional Financial Information
Slide 22: Diversified across markets and products
Diversified across markets and products Operating profit performance by reporting segment and channel Global Global Markets Core Greater Markets Consumer & Total Operations China Ingredients Foodservice External sales volume (million kgMS) 340 200 249 789 Operating profit by quarter 4% 7% 11%
Slide 23: Channel performance
Channel performance For the six months ended 31 January Total continuing operations Ingredients Foodservice Consumer NZD million 2024 2025 ∆%1 2024 2025 2024 2025 2024 2025 Sales volume ('000 MT) 1,721 1,723 - 1,083 1,055 295 310 343 358 Sales volume (million kgMS) 795 789 (1)% 592 569 121 131 82 89
Slide 24: Ingredients contributing to stronger milk price and earnings
Ingredients contributing to stronger milk price and earnings Key performance drivers Quarterly performance Operating profit ($ million) FY25 H1 Within the regions 1000 16.2% 11.9% 13.7% 11.3% 16.0% 14.8% 20.0% 117 (1) 696 900 10.0% 136 (23) 800 0.0% 700 -10.0% 467 600 -20.0% 500 471 -30.0% 274 400 -
Slide 25: Volume growth in Foodservice continues
Volume growth in Foodservice continues Key performance drivers Quarterly performance Operating profit ($ million) FY25 H1 Within the regions 29.4% 23.3% 23.5% 1000 40.0% 900 16.0% 18.0% 21.0% 20.0% 800 700 0.0% 600 500 -20.0% 342 (28) 48 (109) 400 (23) 230 300 208 -40.0% 200 134 109 94 136 -60.0% 10
Slide 26: Consumer operating performance
Consumer operating performance Key performance drivers Quarterly performance Operating profit ($ million) FY25 H1 Within the regions 600 28.8% 25.2% 26.5% 27.0% 18.5% 22.9% 30.0% 500 39 (24) 10.0% 400 177 (7) (12) 173 300 -10.0% 200 116 96 -30.0% 61 72 77 (50) 100 -50.0% 0 FY24 H1 Core Volume Margin
Slide 27: Operating earnings by In Scope and Out of Scope
Operating earnings by In Scope and Out of Scope In Scope Out of Scope Total External sales volume 130 659 789 • ‘In Scope’ represents businesses included in Fonterra’s proposed (million kgMS) 7% 2% 1% Consumer divestment • In preparing the In Scope and Out of Scope breakdowns we have: Operatin
Slide 28: Free cash flow remains a key focus
Free cash flow remains a key focus Five-year trend Movements in free cash flow ($ million) ($ million) 423 369 (397) 224 (30) (397) (632) (849) (2,387) 68 (2,069) (2,069) FY24 H1 Earnings Suppliers Trade and Capex and FY25 H1 free cash flow payable other working other free cash flow FY20 H1 FY21 H1
Slide 29: Resilience of the balance sheet reflected in key metrics and 'A band' credit rating
Resilience of the balance sheet reflected in key metrics and ‘A band’ credit rating Net debt ($ billion) Gearing ratio (%) • Net debt is $1.3b higher, due to: 47.3 6.1 44.142.4 43.3 – an increase in working capital during the year 5.6 5.3 5.8 5.5 38.5 39.4 34.6 reflecting higher milk prices and the
Slide 30: Total Group performance
Total Group performance For the six months ended Total Group Continuing operations Discontinued operations 31 January NZD million 2024 2025 ∆% 2024 2025 ∆% 2024 2025 ∆% Sales volume ('000 MT) 1,780 1,723 (3)% 1,721 1,723 - 59 - - Sales volume (million kgMS)1 795 789 (1)% 795 789 (1)% - - - Revenue 1
Slide 31: Return on capital
Return on capital For the 12 months ended 31 January 2024 2025 NZD million • Return on capital of 10.2%, above the 5-year average and Total Group normalised operating profit 1,959 1,681 tracking to be within FY25 target range of 8 – 10% • The change relative to previous period reflects: Finance inco
Slide 32: Global Markets Ingredients end-to-end performance
Global Markets Ingredients end-to-end performance For the six months ended 31 January Total Global Markets Ingredients1 Ingredients Foodservice Consumer NZD million 2024 2025 ∆%2 2024 2025 2024 2025 2024 2025 Sales volume ('000 MT) 630 616 (2)% 595 574 28 33 7 9 Sales volume (million kgMS) 355 340 (
Slide 33: Global Markets Consumer and Foodservice end-to-end performance
Global Markets Consumer and Foodservice end-to-end performance Total Global Markets For the six months ended 31 January Ingredients Foodservice Consumer Consumer & Foodservice1 NZD million 2024 2025 ∆%2 2024 2025 2024 2025 2024 2025 Sales volume ('000 MT) 609 582 (4)% 205 171 109 110 295 301 Sales v
Slide 34: Greater China end-to-end performance
Greater China end-to-end performance For the six months ended 31 January Total Greater China1 Ingredients Foodservice Consumer NZD million 2024 2025 ∆%2 2024 2025 2024 2025 2024 2025 Sales volume ('000 MT) 482 525 9% 283 310 158 167 41 48 Sales volume (million kgMS) 225 249 11% 143 159 74 81 8 9 Rev
Slide 35: Appendix
Appendix
Slide 36: FY25 Integrated Scorecard
FY25 Integrated Scorecard as at 31 January 2025 Key Metrics FY23 Actual FY24 Actual FY25 Scorecard FY25 YTD People Serious harm¹ 18 16 12 1 Percentage of Health, Safety and Wellbeing priority actions fully completed by due date 76% 77% 95% 98% Culture Measure 79 79 81 79 Nature GHG emissions (Scope
Slide 37: Data sources
Data sources Dairy Production and Imports • 12-month production − Australia, New Zealand, US (Jan 2024 to Jan 2025) Dairy Australia, DCANZ, USDA − EU (Dec 2023 to Dec 2024), Eurostat • 3-month production − Australia, New Zealand, US (Nov 2023 – Jan 2024 to Nov 2024 – Jan 2025) Dairy Australia, DCANZ
Slide 38: Non-GAAP Measures
Non-GAAP Measures Fonterra uses several non-GAAP measures when discussing financial performance. Non-GAAP measures are not defined or specified by NZ IFRS. Management believes that these measures provide useful information as they provide valuable insight on the underlying performance of the busines
Slide 39: Glossary
Glossary Greater China Normalisation adjustments Trade working capital represents the Ingredients, Foodservice and Consumer means adjustments made for certain transactions that meet the is total trade and associate receivables plus inventories, less channels in Greater China requirements of the Grou
Slide 40: Dairy for life
Dairy for life
Fonterra Co-operative Group — H1 2025 Earnings Presentation on 6ix