Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — Investor Presentation (March 2012)
18 slides from Fonterra Co-operative's investor presentation, Mar 29, 2012
Slide 1: Fonterra Strategy Refresh
29 March 2012 FONTERRA STRATEGY REFRESH Fonterra Co-operative Group Ltd
Slide 2: Strengths, Opportunities, Strategic Choices
STRENGTHS OPPORTUNITIES STRATEGIC CHOICES • Access to quality milk • Forecast global volume • Target geographies and • Efficient farms demand growth of at least nutritional needs 100 billion litres by 2020 • Ensure strong alignment • Integrated model • NZ could supply an with vision • Strong, broad
Slide 3: Emerging Markets Are Key
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES Outlook to 2020 EMERGING MARKETS 7% ARE KEY 10% 4% <1% <1% Europe China <1% 1% 2% Nth America 4% India 2% 2-3% 2% MENA <1% 2% LATAM ANZ Demand Growth Milk Supply Growth Source: FAO, Euromonitor, Fonterra estimates Page 3 Fonterra Co-operative Group Ltd
Slide 4: Exciting Growth Forecasts
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES EXCITING GROWTH Formal Dairy Market FORECASTS 500 bn L by 2020 (3% CAGR) Globally Traded Dairy Market 84 bn L by 2020 (5-6% CAGR) New Zealand 375 billion litres 22 bn L by 2020 (2% CAGR) 49 17 billion Bn L litres Source: FAO, UN Comtrade, Euromonitor, Fonter
Slide 5: Global Megatrends Informing Strategy
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES GLOBAL MEGATRENDS INFORMING STRATEGY Rising Social Rise of Increase in demand for demographics Nutrition for Increased New Emerging commodity dairy (e.g. Aging in Healthy focus on technology Markets & prices & nutritional OECD & Ageing sustainability & innov
Slide 6: Strategy Principles
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES STRATEGY PRINCIPLES Our Vision and Objectives New Business Cash Generators Growth Generators Generators What is our source of What will be the sources What are our mould- cash to generate & of our future cash flow? breaking opportunity finance our growth? ar
Slide 7: New Group Portfolio
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES NEW GROUP PORTFOLIO Our Vision and Objectives Cash Generators Growth Generators New Business ‘Must do’ ‘Can do’ ‘Want to do’ New Zealand Milk China India Middle-east & North Africa ASEAN Advanced Nutrition (MENA) Optimise Latin America (LATAM) ANZ Out-of-Hom
Slide 8: Seven Strategic Paths
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES SEVEN 1. Optimise New Zealand milk STRATEGIC PATHS 2. Build and grow beyond our current consumer positions 3. Deliver on foodservice potential 4. Grow our position in mobility 5. Develop selected leading positions in paediatrics and maternal 6. Selectively i
Slide 9: Optimise New Zealand Milk
STRATEGIC STRENGTHS OPPORTUNITIES 1. CHOICES OPTIMISE NEW ZEALAND MILK • Grow with the market • Enhance asset footprint • Drive improved price achievement and cost to serve • Increase speed/agility of our supply chain • Expand financial risk management tools Page 9 Fonterra Co-operative Group Ltd
Slide 10: Build & Grow Beyond Current Consumer Positions
2. STRENGTHS OPPORTUNITIES STRATEGIC CHOICES BUILD & GROW BEYOND CURRENT CONSUMER POSITIONS • Leverage our leadership position in ANZ • Invest in key emerging markets - New/underpenetrated Asian markets - China - Latin America - MENA Page 10 Fonterra Co-operative Group Ltd
Slide 11: Deliver on Foodservice Potential
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES 3. DELIVER ON FOODSERVICE POTENTIAL • Drive cash from established & profitable businesses • Drive growth in key emerging markets - China - ASEAN - LATAM - MENA • Continue innovation investment Page 11 Fonterra Co-operative Group Ltd
Slide 12: Grow Our Position in Mobility
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES 4. GROW OUR POSITION IN MOBILITY • Strengthen Anlene leadership in ASEAN through portfolio expansion and increased penetration • Drive Anlene in China across selected regions Page 12 Fonterra Co-operative Group Ltd
Slide 13: Develop Selected Leading Positions in Paediatrics & Maternal
5. STRENGTHS OPPORTUNITIES STRATEGIC CHOICES DEVELOP SELECTED LEADING POSITIONS IN PAEDIATRICS & MATERNAL • Step change in focus on paediatric ingredients in China • Strengthen our leadership position in our branded maternal category • Enhance position in infant formula in selected Asian markets • C
Slide 14: Selectively Invest in Milk Pools
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES 6. SELECTIVELY INVEST IN MILK POOLS • Maintain strong milk supply position in New Zealand, Australia & Latam • Stage-gated investment in additional China farms, through partnerships • Focus on food security & safety • Pilot farms in selected markets to test
Slide 15: Alignment of Business & Organisation to Enable Strategy
7. STRENGTHS OPPORTUNITIES STRATEGIC CHOICES ALIGNMENT OF BUSINESS & ORGANISATION TO ENABLE STRATEGY • Re-align overhead spend to focus on fastest growing markets • Exit unprofitable, uncompetitive and non-core categories and markets • Improve efficiency and effectiveness of corporate centre Page 15
Slide 16: Key Value Drivers
STRATEGIC STRENGTHS OPPORTUNITIES CHOICES KEY VALUE DRIVERS 2011 2010 2009 Volume (M MT) 3.9 3.8 3.7 Normalised EBIT ($M) 1,005 904 1,019 EBIT Margin1 5.1% 5.4% 6.4% Operating & Investing Cash flow 839 636 1,393 ($M) 2 Return on Capital Employed 3 9.3% 8.7% 9.2% Note 1 –Normalised EBIT (excluding no
Slide 17: Strategy Sets Platform for Growth
STRATEGIC STRENGTHS OPPORTUNITIES STRATEGY CHOICES SETS PLATFORM FOR GROWTH Drive Return on Improve Shareholder Improve Value Drivers Capital (ROCE) Value • Volume growth • Value growth Farmer Improve Return on Income • Strong operating Capital Employed & investing cash flow Value of Fonterra Page 1
Slide 18: Summary
SUMMARY 1. Growth – volume and value Multiple milk pools Integration back End-to-end business • Global exports of home milk to the farm • B2B Ingredients; and • Local milk pools • B2C Branded 2. Focuses on our strengths P P P P 3. Clear Choices 4. Executable Page 18 Fonterra Co-operative Group Ltd
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