Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — Q3 FY2024 Earnings Presentation
33 slides from Fonterra Co-operative's earnings presentation, May 29, 2024
Slide 1: 2024 Third Quarter Business Update
Fonterra Co-operative Group Centers) 2024 Third Quarter Business Update 29 May 2024 Dairy for life
Slide 2: from 1.5b from 1.3b from 81c
from 1.5b from 1.3b from 81c from 11.7% from 60c from 34.2%
Slide 3: Third quarter highlights and outlook
• Continuing operations’ profit after tax of $1,013m, up $20m or 2% • Equivalent to 61c earnings per share attributable to shareholders and unit holders • Operating profit of $1,440m down $86m, or 6% • Continued strong earnings performance in Foodservice and Consumer, with margins holding longer tha
Slide 4: Price relativities between Reference and Non-Reference products
Q1 Q2 Q3 Q1 Q2 Q3 Average Non-Reference price 4,939 5,458 5,204 Average Non-Reference price 4,333 4,218 4,347 (USD/MT) Average Reference price 4,300 3,862 3,561 Average Reference price 3,298 3,055 3,395 Price difference 639 1,596 1,643 Price difference 1,035 1,163 952 6,500 5,500 4,500 3,500 2,500 F
Slide 5: EBIT bridge FY23 to FY24
($ million) FY23 benefited FY23 includes Soprole significantly from Channel performance Underlying Consumer growth of $160m after earnings and gain from very favourable adjusting for $162m of impairments in FY23 divestments price relativities 1,989 (463) (33) - 1,526 (610) 322 1,440 - 1,407 202 - -
Slide 6: Profit after tax bridge FY23 to FY24
($ million) Continuing operations 1,326 (333) 55 (40) (86) 51 993 1,013 973 81c EPS 60c EPS 61c EPS 58c EPS FY23 Discontinued FY23 Operating Net finance Tax FY24 Discontinued FY24 Total Group operations continuing operations earnings costs continuing operations operations Total Group profit after ta
Slide 7: Operating earnings performance by reporting segment and channel
Operating earnings performance by reporting segment and channel 561 501 289 251 274 226 216 208 97 110 134 109 85 42 116 72 22 51 61 (82) (147) Note: For the nine months ended 30 April. Prepared on a continuing operations basis
Slide 8: Forecast 2023/24 Farmgate Milk Price
2021/22 Season 2022/23 Season 2023/24 Season Forecast 6,000 5,000 4,000 $9.30 USD/MT $8.22 3,000 $7.80 2,000 per kgMS 1,000 - May-21 May-22 May-23 May-24 Apr-24 Fonterra Reference Product shipment price Average Reference Product shipment price for the season The range has narrowed reflecting: • incr
Slide 9: FY24 continuing operations earnings outlook
FY22 FY23 FY24 YTD Q3 6,000 5,000 4,000 USD/MT 3,000 2,000 per share 1,000 , - Jul-21 Jan-22 Jul-22 , Jan-23 Jul-23 Jan-24 , Fonterra Non-Reference shipment price Fonterra Reference shipment price The lifted and narrowed range reflects: • gross margins in Foodservice and Consumer holding for longer
Slide 10: Opening 2024/25 forecast Farmgate Milk Price
• Midpoint of $8.00 per kgMS, $7.25 – $8.75 range reflects: • minimal new season production contracted, as is normal at the start of a new season, allowing for significant exposure to volatility in commodity prices • China import volumes have not yet recovered to historical levels • Midpoint at $8.0
Slide 11: Additional Financial Information
fh Additiona Financial Information
Slide 12: Nine-month financial metrics 2020-2024
3,590 3,087 3,053 3,000 2,946 3,121 2,677 19.7 17.0 17.2 2,522 16.0 15.5 2,399 2,435 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 ('000 MT) ($ billion) ($ million) 2,016 1,989 1,846 1,804 1,791 1,632 1,407 1,326 1,057 975 973 825 594 604 472 2020 2021 2022 2023 2024 202
Slide 13: Season to date milk collections
90 2021/22 80 2022/23 • Season to date collections, 1 June – 30 April, were 1,404 million kgMS, 0.4% behind last season 2023/24 70 • Challenging weather conditions leading up to peak production impacted soil moisture and temperatures, 60 resulting in lower pasture growth and quality in the North Isl
Slide 14: Total Group income statement
Sales volume (‘000 MT) 2,580 420 3,000 2,618 59 2,677 Revenue 18,430 1,307 19,737 17,002 172 17,174 Cost of goods sold (15,207) (940) (16,147) (13,947) (106) (14,053) Gross profit 3,223 367 3,590 3,055 66 3,121 Gross margin (%) 17.5% 28.1% 18.2% 18.0% 38.4% 18.2% Operating expenses (1,752) (264) (2,
Slide 15: Continuing operations financial performance
15 • Increased sales volumes driven by optimisation of inventory levels. Higher ∆1 sales volume through Foodservice and Consumer channels Sales volume (‘000 MT) 2,580 2,618 1% • Revenue and gross profit both decreased due to lower product prices in the Ingredients channel Revenue 18,430 17,002 (8)%
Slide 16: Discontinued operations: gain/(loss) on sale
Gain/(loss) on sale 357 (12) 345 (66) (66) Profit/(loss) before net finance costs and tax 357 (12) 345 (66) (66) Net finance costs and tax (97) - (97) - - Profit/(loss) after tax 260 (12) 248 (66) (66) Profit/(loss) attributable to non-controlling interests - - - (3) (3) Profit/(loss) after tax attr
Slide 17: Ingredients channel performance
∆ ∆ ∆ Sales volume ('000 MT) 1,696 1,684 (1)% 411 428 4% 473 506 7% Revenue 13,063 11,138 (15)% 2,900 3,088 6% 2,467 2,776 13% Cost of goods sold (10,958) (9,614) 12% (2,363) (2,303) 3% (1,886) (2,030) (8)% Gross profit 2,105 1,524 (28)% 537 785 46% 581 746 28% Operating expenses (790) (833) (5)% (2
Slide 18: Ingredients EBIT
EBIT ($ million) 1,351 (534) FY24 YTD Q3 13.9% 16.4% 17.6% 16.2% 13.7% Within the regions 1000 12.5% 11.9% 20.0% 900 10.0% (10) (31) (35) 800 0.0% 741 700 -10.0% 561 600 501 -20.0% 500 -30.0% 400 289 251 274 -40.0% 300 226 216 -50.0% 200 -60.0% 100 -70.0% 0 -80.0% FY23 Core Volume Margin Operating F
Slide 19: Reference and Non-Reference Products volumes and prices
(‘000 MT) • Reference Products sales volume up 27,000 MT due to increasing Reference Products 1,314 1,341 27 shipment of powders Non-Reference Products 656 657 1 • Product prices in the Non-Reference portfolio have declined more relative to the Reference portfolio mainly due to reduced demand for (N
Slide 20: Foodservice EBIT
EBIT ($ million) FY24 YTD Q3 29.4% Within the regions 23.3% 23.5% 1000 40.0% 19.3% 21.7% 22.0% 900 14.4% 20.0% 800 700 0.0% 200 (46) 451 600 500 -20.0% 249 27 21 400 208 -40.0% 300 97 110 134 109 85 200 42 -60.0% 100 0 -80.0% FY23 EBIT Core Volume Margin Operating FY24 EBIT FY23 Q1 FY23 Q2 FY23 Q3 F
Slide 21: Consumer EBIT
EBIT ($ million) FY24 YTD Q3 600 25.8% 28.8% 25.2% 26.5% Within the regions 23.8% 21.2% 24.0% 30.0% 500 400 159 248 10.0% 300 110 -10.0% 116 200 51 61 72 22 (82) 100 (147) -30.0% (74) 14 39 0 -50.0% -100 FY23 EBIT Core Volume Margin Operating FY24 EBIT -200 -70.0% Operations expenses and other FY23
Slide 22: Performance by region
∆ ∆ ∆ Sales volume ('000 MT) 2,058 2,078 1% 1,909 1,936 1% 714 720 1% Revenue 14,433 12,515 (13)% 13,983 12,569 (10)% 5,277 4,763 (10)% Cost of goods sold (13,142) (11,721) 11% (12,593) (10,991) 13% (4,735) (4,080) 14% Gross profit 1,291 794 (38)% 1,390 1,578 14% 542 683 26% Operating expenses (590)
Slide 23: Global Markets performance
∆ Sales volume ('000 MT) 1,866 1,898 2% 1,247 1,245 203 204 416 449 Revenue 13,532 12,429 (8)% 10,028 8,634 1,324 1,318 2,180 2,477 Cost of goods sold (11,166) (10,278) 8% (8,356) (7,456) (1,145) (1,011) (1,665) (1,811) Gross profit 2,366 2,151 (9)% 1,672 1,178 179 307 515 666 Operating expenses (1,
Slide 24: Greater China performance
∆ Sales volume ('000 MT) 714 720 1% 449 439 208 224 57 57 Revenue 4,898 4,573 (7)% 3,035 2,504 1,576 1,770 287 299 Cost of goods sold (4,041) (3,669) 9% (2,602) (2,158) (1,218) (1,292) (221) (219) Gross profit 857 904 5% 433 346 358 478 66 80 Operating expenses (411) (423) (3)% (160) (171) (141) (16
Slide 25: Core Operations attributed to the regions
To provide a full end-to-end view of performance, Core Operations is attributed to the regions 561 501 289 251 274 226 216 208 97 110 134 109 85 42 116 72 22 51 61 (147) (82) Note: For the nine months ended 30 April. Prepared on a continuing operations basis
Slide 26: Exploring divestment options for Consumer and associated businesses
We are exploring divestment options for Consumer and associated businesses In preparing the In Scope and Out of Scope breakdowns, we have applied the same principles and assumptions as used in our externally published channel and segment reporting, they reflect existing transfer pricing arrangements
Slide 27: Appendix
ama Appendix _ asi bl
Slide 28: Sustainability and performance measures
Serious harm 8 5 4 2 Gender diversity (Band 12+) 37.6% 39.5% 40.5% 39.3% Culture Measure – 79 –¹ 79 GHG emissions (Scope 1,2)² (11.2)% (14.1)% (15.6)% (18.6)% FEP adoption (New Zealand) 71% 85% 92% 91% Water Improvement Plans in place – 44.0% 100.0% On track Share of New Zealand milk collected for t
Slide 29: Source data and date ranges for price charts
• Price Relativities, Forecast 2023/24 season Farmgate Milk Price and FY24 continuing operations’ earnings outlook – Reference and Non-Reference actuals: Fonterra Free Alongside Ship (FAS) prices of the New Zealand Ingredients portfolio – GDT only Non-Reference contract shipment price uses GDT chedd
Slide 30: Glossary of terms
is used to indicate that a measure or sub-total excludes amounts means a component of the Group that is classified as held for sale means the electronic auction platform that is used to sell commodity attributable to non-controlling interests (or has been sold) and represents, or is part of a single
Slide 31: Glossary of terms (continued)
means all NZ milk solids processed by Core Operations, except for New Zealand: A period of 12 months from 1 June to 31 May Reference Commodity Products Australia: A period of 12 months from 1 July to 30 June means adjustments made for certain transactions that meet the is used to indicate that a mea
Slide 32: Forward-looking statements disclaimer
This presentation may contain forward-looking statements, financial targets and ambitions (“Forward Statements”), each of which is based on a range of assumptions, including (in the case of our 2030 strategy) the assumptions noted in the Appendix of the booklet titled Our Path to 2030 which is avail
Slide 33: Dairy for life
Dairy for life fonterra.com
Fonterra Co-operative Group — Q3 FY2024 Earnings Presentation on 6ix