Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — FY2025 Earnings Presentation
68 slides from Fonterra Co-operative's earnings presentation, Sep 24, 2025
Slide 1: Fonterra Co-operative Group 2025 Annual Results
Fonterra Co-operative Group 2025 Annual Results
Slide 2: Important Cautions and Disclaimer
Important Cautions and Disclaimer Forward looking statements This presentation contains certain forward-looking statements. There are risks (both known and unknown), uncertainties, assumptions and other important factors that could cause the actual conduct, market conditions, results, performance or
Slide 3: Content
Content Results overview and divestment 4-21 Key financial drivers of strategy 22-30 Additional performance information 31-45 FY24 & FY25 pro forma Fonterra and 46-61 Mainland financials Scorecard and Glossary 62-67
Slide 4: Continued strong performance in FY25
Continued strong performance in FY25 • $16.2b in payments generated in FY25, up $3.8b on prior year • $15.3b in milk payments or $10.16 per kgMS • $916m in imputed dividends or 57 cents per share • equivalent to a total payout of $10.73 on average for supplying shareholders¹ • Operating profit $1.7b
Slide 5: Results at a glance
Results at a glance Farmgate Milk Price Dividend Return on capital $ 10.16 57 cents imputed 10.9 % from $7.83 from 55c unimputed from 9.9% tax adjusted from 11.3% unadjusted Reported Reported Reported Normalised operating profit profit after tax earnings per share earnings per share $ 1,732
Slide 6: Momentum from uplift in performance continues
Momentum from uplift in performance continues Total Operating profit Net debt Return on capital Payout Earnings per share Gearing Dividends Milk Price ($) Normalised EPS (cents) Gearing Return on capital (RoC) Total Payout ($) Reported operating profit ($b) Net debt ($b) Cash Dividends (cents) Imput
Slide 7: Higher operating profit offset by tax change
Higher operating profit offset by tax change FY24 to FY25 normalised profit after tax¹ ($ million) Operating Profit $190 $216m due to change in tax treatment and will be attached as imputation credits Improved margins and Volume growth in UHT cream, product mix butter and mozzarella Improved Austr
Slide 8: Why divest Mainland?
Why divest Mainland? Channel performance 32% 20% • Fonterra’s Ingredients business generates the Farmgate 16% 19% Advanced & Specialty Milk Price and, alongside Foodservice, contributes the 15% 16% 12% Foodservice majority of the Co-op’s earnings 5% 7% 9% Consumer 6% 5% Milk Price 5% • A divestment
Slide 9: Divestment Proposal
Divestment Proposal Purchase Price Proposed Tax-Free Capital Return Shareholder Vote $4.22b $2.00 per share 30 Oct Key terms of sale agreement • Lactalis to purchase: • Includes long term agreements for milk supply, ingredients and other products to the divested business • Consumer business (excludi
Slide 10: How we create end-to-end value for farmers
How we create end-to-end value for farmers 10
Slide 11: Our Strategy
Our Strategy WV oe Ose aur Co-operative, empowering people, to create goodness for generations. You, me, us together. Tatou, tatou. OUR VISION ; The source of the world’s most valued dairy Weg OUR CHOICES Deli aaa Unleash our Keep Invest in Build on our Innovate to f 3 Ingredients momentum in operat
Slide 12: B2B dairy expertise that leads the world
B2B dairy expertise that leads the world NZMP and Anchor Food Professionals are world leading product and solutions brands Unleashing our Ingredients engine Keep momentum in Foodservice 100+ 50+ products products • One of the largest product ranges in the global dairy industry • High performing dair
Slide 13: A significant and diverse B2B presence globally
A significant and diverse B2B presence globally Europe EMPLOYEES (FTE) 150 China MANUFACTURING SITES EMPLOYEES (FTE) 1 620 North Asia Americas EMPLOYEES (FTE) EMPLOYEES (FTE) $1 100 100 Revenue (NZD) billion $2 $7 billion ~24b billion $3 Rest of billion Asia Pacific Employees1 $3 EMPLOYEES (FTE) 220
Slide 14: Investing to support strategy
Investing to support strategy FY26 includes a strong pipeline of investments continuing to unlock capacity for higher margin products 2026 2027 Early 2026 May August October Studholme expansion COMPLETED Milkfat processing expansion • $75m advanced protein hub investment, BEGINS increasing capacity
Slide 15: Delivering on strategic targets
Delivering on strategic targets FY19-24 OUTCOMES TARGETS & POLICY SETTINGS AVERAGE For FY25 Return on capital¹ 10-12% 8.2% • 10.9% return on capital above 6- Strong year average and within long- Shareholder returns Dividend policy 60-80% 62% term target range • 57c dividend is 80% distribution Capit
Slide 16: B2B performance drives earnings
B2B performance drives earnings Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group Operating Profit¹ (NZD billion) Excluding Mainland 2.2 Includes Soprole $0.35b gain on sale 1.9 1.7 1.7 1.5 1.5 • Excluding M
Slide 17: Financial strength, supporting growth and sustainable returns
Financial strength, supporting growth and sustainable returns Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group Adjusted Net Debt (NZD billion) Debt to EBITDA Gearing Ratio Excluding Mainland • Co-op’s finan
Slide 18: A more efficient use of capital
A more efficient use of capital Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group Return on Capital Impact of tax change Excluding Mainland 13.2% 13.6% 12.5% 12.4% 12.0% 11.3% 11.6% • FY25 return on capital
Slide 19: A more focused, returns-driven Co-op
A more focused, returns-driven Co-op Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group Normalised earnings per share (cents) Excluding Mainland 80 • FY25’s 57c dividend is an 80% distribution of 71c earnings
Slide 20: FY26 Outlook & Priorities
FY26 Outlook & Priorities Forecast Farmgate Milk Price FY26 forecast earnings¹ $9.00-$11.00 45-65 per kgMS cents per share FY26 Outlook FY26 Priorities • Global supply increasing, with stronger milk flows in New Zealand, and • Proposed divestment, shareholder vote and capital return following North
Slide 21: Your Co-op, Your Vote.
Your Co-op, Your Vote. Get ready to have your say on the consumer divestment proposal. Early Oct | Tues7Oct | Thurs 30 Oct Notice of Meeting issued Voting Opens Special Meeting held - Results announced To learn more scan the QR code Your (is) - four, or visit nzfarmsource.co.nz/haveyoursay Dairy for
Slide 22: Key financial drivers of strategy
Key financial drivers of strategy 13 Sept 2024
Slide 23: Deliver strongest farmer offering
Deliver strongest farmer offering • 2024/25 season total payout of $10.73 per kgMS on average for a supplying Fonterra supplier base and milk collections¹ shareholder holding one share for one milk solid supplied Full season figures • Farmgate Milk Price of $10.16 per kgMS • Fully imputed dividend o
Slide 24: Farmgate Milk Price
Farmgate Milk Price Drivers of the Farmgate Milk Price Monthly Milk Prices ($ per kgMS) ($ per kgMS) 0.22 (0.04) 10.16 2.11 $12 2024/25 season monthly milk prices average to $10.16, the $10 Farmgate Milk Price 7.83 0.04 $8 2023/24 season monthly milk prices average to $7.83, the Farmgate Milk Price
Slide 25: Shifting solids into higher value products
Shifting solids into higher value products • 53.8% of milk solids were allocated to the Ingredients Reference Product portfolio, Solids allocation¹ compared to 55.3% in the prior year, supporting our strategic objective to shift solids into higher margin products Full financial year figures • The In
Slide 26: Milk solids allocated to higher value products
Milk solids allocated to higher value products NZ milk solids manufactured (kgMS millions) Whole Milk Powder: For year ended 31 July • Similar volume of WMP was manufactured in FY25 despite higher collections, resulting in a comparative decrease in the percentage of milk solids allocated, aligning t
Slide 27: Core Operations manufacturing cash costs per kgMS
Core Operations manufacturing cash costs per kgMS Core Operations manufacturing cash costs Movements in Core Operations ($/kgMS) manufacturing cash costs ($ million) (4) 33 79 $2.79 79 47 $2.65 $2.67 4,023 $2.55 $2.59 - - - - 3,789 - $2.62 $2.67 $2.58 $2.30 2.58 0.04 0.01 0.01 0.02 0.03 2.
Slide 28: Shifting to complex value chain impacting operations in near term
Shifting to complex value chain impacting operations in near term Milk Utilisation remains consistently high reflecting: • Continued focus on solids recovery and product mix optimisation • Improvements in yield and processing efficiencies Milk utilisation Unplanned downtime Unplanned downtime contin
Slide 29: Cash operating expense per kgMS
Cash operating expense per kgMS Cash operating expenses Allocation of Actual cash Cash operating ($/kgMS) Channel collections operating expenses (m kgMS) expenses $1.38 $1.39 $1.40 $1.33 $1.32 $1.40 Ingredients 1,187kgMS $1,052m $0.89/kgMS $1.36 9 kgMS $81m $0.06 /kgMS $1.30 $1.17 $1.10 Foodse
Slide 30: Capital investments to support resilience and growth
Capital investments to support resilience and growth Capital invested Breakdown of essential capital expenditure¹ Full financial year figures ($ million) 1,000 980 Full financial year figures ($ million) 930 621 635 128 747 720 534 558 88 92 79 167 466 55 608 617 106 76 60 114 47 63 30 56 74 45 104
Slide 31: Additional performance information
Additional performance information 13 Sept 2024
Slide 32: Improving supply, and strong demand from key importing regions
Improving supply, and US EU strong demand from 3-month 3.2% 3-month 0.0% – China 12-month 0.9% 12-month 0.4% key importing regions 3-month 2.4% 12-month 3.2% • Dairy market conditions remain broadly favourable: • Demand remains strong across key import regions, particularly Southeast Asia
Slide 33: Total Group performance
Total Group performance For year ended 31 July Total Group Continuing operations Discontinued operations NZD million 2024 2025 ∆%1 2024 2025 ∆%1 2024 2025 ∆%1 Sales volume ('000 MT) 3,529 3,488 (1)% 3,034 3,074 1% 495 414 (16)% Sales volume (million kgMS) 1,613 1,620 -% 1,500 1,516 1% 113 104 (8)% R
Slide 34: Normalised continuing operations channel performance
Normalised continuing operations channel performance For year ended 31 July Total continuing operations Ingredients Foodservice NZD million 2024 2025 ∆%1 2024 2025 2024 2025 Sales volume ('000 MT) 3,034 3,074 1% 2,199 2,197 835 877 Sales volume (million kgMS) 1,500 1,516 1% 1,201 1,193 299 323 Reven
Slide 35: Normalised discontinued operations channel performance
Normalised discontinued operations channel performance For year ended 31 July Total discontinued operations NZD million 2024 2025 ∆%2 Sales volume ('000 MT) 495 414 (16)% Sales volume (million kgMS) 113 104 (8)% Revenue 2,571 2,339 (9)% Cost of goods sold (1,678) (1,433) 15% • Normalised discontinue
Slide 36: New Zealand-sourced Ingredients' product mix
New Zealand-sourced Ingredients’ product mix Fonterra Revenue Reference and Non-Reference Price Relativities (USD/MT) 6,500 5,500 4,500 3,500 2,500 FY23 FY24 FY25 • Revenue price relativities narrowed significantly during the year. Compared to last year, the average price for the Reference portfolio
Slide 37: New Zealand-sourced Ingredients' product mix
New Zealand-sourced Ingredients’ product mix 2024 2025 ∆% Sales Volume (‘000 MT) Reference Products 1,744 1,698 (3)% • Favourable product mix shift between Reference and Non-Reference Non-Reference Products 891 941 6% portfolio, with 50,000 MT more into higher value Non-Reference Revenue (NZD) produ
Slide 38: Ingredients performance
Ingredients performance Key performance drivers Quarterly performance Operating profit ($ million) FY24 FY25 Within the regions 16.8% 14.1% 15.1% 14.3% 13.1% 11.6% 11.2% 8.3% 20.0% 97 0 1,101 93 (27) 880 10.0% 938 0.0% 680 -10.0% 458 361 -20.0% 480 276 291 -30.0% 280 210 161 217 -40.0% 65 -50.0% 80
Slide 39: Foodservice performance
Foodservice performance Key performance drivers Quarterly performance Operating profit ($ million) FY24 FY25 Within the regions 22.9% 18.1% 18.1% 17.9% 880 9.2% 13.5% 15.0% 13.7% 30.0% 10.0% 680 113 (209) 480 -10.0% 95 203 313 28 340 280 151 -30.0% 115 90 108 90 80 -50.0% -120 (9) -70.0% (95) FY24 C
Slide 40: Operating expenses
Operating expenses NZD million 2024 2025 %∆1 Staff expenses² 776 826 6% Storage and distribution 130 127 (2)% Advertising and promotion 109 98 (10)% • Operating expenses from continuing operations increased $92m, or 5%, mainly due to increased investment in strategic initiatives to Information techn
Slide 41: Returning cash to farmers faster reflected in free cash flow
Returning cash to farmers faster reflected in free cash flow Five-year trend Movements in free cash flow¹ ($ million) ($ million) 3,650 572 (1,060) 1,602 135 1,602 13 1,262 1,417 1,262 FY24 Earnings Suppliers Trade and Capex and FY25 (324) free cash flow payable other working other free cash flow FY
Slide 42: Strong balance sheet reflected in key metrics
Strong balance sheet reflected in key metrics and ‘A band’ credit rating Net debt ($ billion) Leverage 3.2 2.7 6.1 5.8 5.6 5.3 5.5 1.3 1.2 1.1 4.3 4.2 45.7 44.8 42.4 3.2 38.5 39.4 2.6 2.6 32.7 32.8 • Net debt and leverage metrics are 28.8 24.0 23.9 consistent with prior year reflecting cash earnings
Slide 43: Return on capital
Return on capital For the year ended 31 July 2024 2025 NZD million Total Group normalised operating profit 1,593 1,838 • Return on capital of 10.9%, above the 5-year average and the FY25 target range of 8 – 10% Finance income on long-term advances 14 8 • The change relative to previous period reflec
Slide 44: Global Markets end-to-end performance
Global Markets end-to-end performance For year ended 31 July Total Global Markets1 Ingredients Foodservice • FY24 reported operating profit re- presented from $1,035m to $726m, reflecting $309m allocated NZD million 2024 2025 ∆%2 2024 2025 2024 2025 to discontinued operations as part of the Mainland
Slide 45: Greater China end-to-end performance
Greater China end-to-end performance For year ended 31 July Total Greater China1 Ingredients Foodservice NZD million 2024 2025 ∆%2 2024 2025 2024 2025 Sales volume ('000 MT) 944 1,032 9% 579 629 365 403 Sales volume (million kgMS) 449 489 9% 298 321 151 168 Revenue 6,157 7,650 24% 3,459 4,367 2,698
Slide 46: FY24 & FY25 historical pro forma Fonterra and Mainland financials
FY24 & FY25 historical pro forma Fonterra and Mainland financials 13 Sept 2024
Slide 47: Explanation of historical pro forma financials
Explanation of historical pro forma financials This section shows historical pro forma financial information for Fonterra and Mainland Group, as if the transaction had already happened. The purpose is to help understand the estimated financial impact of the transaction on Fonterra’s past financial p
Slide 48: Agreements
Agreements Raw Milk Supply Agreement Global Supply Agreement Distribution Agreement Other Agreements Governs raw milk supply from Fonterra to Mainland Governs the manufacturing and supply of The Distribution Agreement provides for Fonterra and Lactalis have agreed to Group in New Zealand and Fonterr
Slide 49: Total Group historical pro forma Statement of P&L
Total Group historical pro forma Statement of P&L Compiled by combining the extracted results of: • continuing operations from Fonterra Group’s Statement of Profit or Loss and Other Comprehensive Income (Continuing operations); and • discontinued operations from note 2(b) of the Fonterra Group finan
Slide 50: Continuing operations historical pro forma Statement of P&L
Continuing operations historical pro forma Statement of P&L Compiled by extracting the results of Continuing operations. Pro forma adjustments have been made to: • remove the effects of Fonterra’s existing transfer pricing arrangements related to Mainland Group that will cease post divestment; • rec
Slide 51: Mainland Group historical pro forma Statement of P&L
Mainland Group historical pro forma Statement of P&L Compiled by extracting the results of Discontinued operations. Pro forma adjustments and pro forma eliminations were made to: • remove $8m post-tax profit in relation to Soprole (FY24: $40m post-tax loss in relation to DPA Brazil (equivalent to a
Slide 52: Historical pro forma Statement of Financial Position
Historical pro forma Statement of Financial Position As at 31 July 2025 Fonterra Mainland Group The Fonterra reported historical Statement of Financial Position has been compiled by Fonterra Pro Forma extracting total assets and liabilities from the Fonterra Group consolidated financial NZD million
Slide 53: Summary of historical pro forma financial ratios
Summary of historical pro forma financial ratios The proceeds from the transaction are not included in the historical pro forma financial information and ratios presented in the Summary of pro forma financial ratios below. Summary historical pro forma financial ratios For year ended 31 July 2025 Fon
Slide 54: Adjusted Net Debt, Gearing and Debt to EBITDA ratios
Adjusted Net Debt, Gearing and Debt to EBITDA ratios (tables presented on slides 55 - 57) The Fonterra reported adjusted net debt, gearing and Debt to EBITDA ratios have been extracted from the Fonterra Group financial statements as at 31 July 2025. The Fonterra historical pro forma adjusted net deb
Slide 55: Fonterra historical pro forma adjusted net debt
Fonterra historical pro forma adjusted net debt As at 31 July 2025 NZD million Fonterra reported Pro Forma adjustments Fonterra historical Pro Forma Total borrowings (including lease liabilities) 3,138 (1) 3,137 Add: Bank overdraft 30 (2) 28 Less: Cash and cash equivalents (309) 7 (302) Add: Borrowi
Slide 56: Fonterra historical pro forma normalised EBITDA
Fonterra historical pro forma normalised EBITDA For year ended 31 July 2025 NZD million Fonterra reported Pro Forma adjustments Fonterra historical Pro Forma Profit after tax 1,079 (151) 928 Add: Net finance costs from continuing operations 184 - 184 Add: Net finance costs from discontinued operatio
Slide 57: Mainland Group historical pro forma adjusted net debt
Mainland Group historical pro forma adjusted net debt The Mainland Group historical pro forma adjusted net debt has been calculated by; • Extracting relevant assets and liabilities held for sale in Fonterra Group consolidated financial statements as at 31 July 2025 (excluding $27m and $5m of unrelat
Slide 58: Fonterra historical pro forma average capital employed and return on capital
Fonterra historical pro forma average capital employed and return on capital (table presented on subsequent slide) The Fonterra reported average capital employed and return on capital has been extracted from the Fonterra Group financial statements as at 31 July 2025. The Fonterra historical pro form
Slide 59: Fonterra historical pro forma average capital employed and return on capital
Fonterra historical pro forma average capital employed and return on capital For year ended 31 July 2024 For year ended 31 July 2025 Fonterra Fonterra Fonterra Pro Forma Fonterra Pro Forma NZD million reported adjustments historical Pro reported adjustments historical Pro Forma Forma Adjusted net de
Slide 60: Mainland Group historical pro forma capital employed and return on capital
Mainland Group historical pro forma capital employed and return on capital (table presented on subsequent slide) The Mainland Group historical pro forma average capital employed calculation extracts Held for Sale balances (excluding $27m and $5m of unrelated assets and liabilities). Pro forma adjust
Slide 61: Mainland Group historical pro forma capital employed and return on capital
Mainland Group historical pro forma capital employed and return on capital For year ended 31 July 2024 For year ended 31 July 2025 Mainland Mainland Group Pro Forma Pro Forma NZD million Held for sale Group historical Held for sale historical Pro adjustments adjustments Pro Forma Forma Adjusted net
Slide 62: Scorecard and Glossary
Scorecard and Glossary 13 Sept 2024
Slide 63: FY25 Integrated Scorecard
FY25 Integrated Scorecard FY25 Key Metrics FY23 Actual FY24 Actual Scorecard FY25 Actual People Serious harm¹ 18 16 12 6 Percentage of Health, Safety and Wellbeing priority actions fully completed by due date 76% 77% 95% 96% Culture Measure 79 79 81 81 Nature GHG emissions (Scope 1,2)² (14.1)% (18.5
Slide 64: FY26 Integrated Scorecard
FY26 Integrated Scorecard FY26 Key Metrics FY24 Actual FY25 Actual Scorecard People Serious harm¹ 16 6 5 Quality of post-Health, Safety and Wellbeing incident actions 0.41 0.4 0.6 Culture Measure 79 81 80 Nature GHG emissions reduction (Scope 1,2)² (18.5)% (20.7)% (26.7)% Additional percentage of Ne
Slide 65: Data sources
Data sources Dairy Production and Imports • 12-month production • Australia, New Zealand, US (Jul 2024 to Jul 2025) Dairy Australia, DCANZ, USDA • EU (Jun 2024 to Jun 2025), Eurostat • 3-month production • Australia, New Zealand, US (May 2024 – Jul 2024 to May 2025 – Jul 2025) Dairy Australia, DCANZ
Slide 66: 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 67: Glossary
Glossary Foodservice Non-Reference Products Trade working capital represents the channel selling to businesses that cater for out-of- means all NZ milk solids processed by Core Operations, except is total trade and associate receivables plus inventories, less home consumption; restaurants, hotels, c
Slide 68: Dairy for life
Dairy for life
Fonterra Co-operative Group — FY2025 Earnings Presentation on 6ix