Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — FY2002 Earnings Presentation
21 slides from Fonterra Co-operative's earnings presentation, Aug 13, 2002
Slide 1: Fonterra Co-operative Group Annual Results Presentation 2001/2002
Fonterra Co-operative Group Annual Results Presentation 2001/2002 Graham Stuart CFO 1 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 2: The Merger
The Merger • Fonterra formed 16 October 2001. • Merger of NZ Dairy Group, Kiwi and the New Zealand Dairy Board to form Fonterra Co-operative Group. Fonterra Co-operative Group NZMP NEW ZEALAND Fonterra MILK Enterprises 2 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 3: Since the Merger We Have Maintained the Momentum on Significant Strategic Initiatives
Since the Merger We Have Maintained the Momentum on Significant Strategic Initiatives • We brought the 3 legacy companies together without any disruption to milk collection, processing or international sales. • In Mexico we acquired Eugenia and La Mesa cheese businesses and consolidated with our exi
Slide 4: Major NZMP Capital Projects Undertaken Or Commissioned During The Year
Since the Merger We Have Maintained the Momentum on Significant Strategic Initiatives Major NZMP Capital Projects Undertaken Or Commissioned During The Year • Plants Commissioned – Clandeboye Powder ($129.5m). – Lichfield Whey ($77.8m). – Clandeboye Lactose ($27.3m). – Stirling Cheese ($18.8m). • Ne
Slide 5: Three Key Messages From Our 2002 Annual Results Announcement
Three Key Messages From Our 2002 Annual Results Announcement • The underlying result is strong but this was a season of two halves, starting with high commodity prices and a low NZ dollar, finishing with low commodity prices and a higher NZ dollar. • The merger was undertaken by using the “purchase
Slide 6: The Underlying Result is Strong
The Underlying Result is Strong 6 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 7: Record Payout on Record Milk Supply Volumes
Record Payout on Record Milk Supply Volumes Year ending Year ending May 2002 May 2001 Payout ($/kgms) 5.33 5.00 Own milk supply (m kgms) 1,111.3 1,049.0 Payout ($M) 5,947 5,245 • A record payout. • Payments to supplying shareholders at $5.947 billion are up 13.4% on the 2001/02 equivalent paid out b
Slide 8: 2002 Was a Year of Two Halves
2002 Was a Year of Two Halves 2,200 0.48 $US $US per Spot Rate tonne 0.47 2,000 Skim Milk Powder Spot Prices 0.46 0.45 1,800 0.44 1,600 0.43 0.42 1,400 $US : $NZ Exchange Rate 0.41 0.4 1,200 0.39 1,000 0.38 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 8
Slide 9: 2002 Payout Impacted by Merger Accounting and Foreign Exchange Hedging
2002 Payout Impacted by Merger Accounting and Foreign Exchange Hedging $NZ $NZ per kgms* millions Payout assuming no merger accounting at actual foreign currency exchange rates 5.59 6,239 The impact of our hedging activities (0.19) (212) = Payout assuming no merger accounting and at hedged rate 5.40
Slide 10: Key Balance Sheet Information
Key Balance Sheet Information Year ending Year ending Change May 2002 May 2001* Current Assets 5,772 5,341 431 Intangible Assets 1,587 492 1,095 Investments & Others 461 590 -129 Fixed Assets 3,980 3,463 517 TOTAL ASSETS 11,800 9,886 1,914 Payables & Other Liabilities 2,490 2,436 54 Interest Bearing
Slide 11: NZMP
NZMP • Sales Volumes – 1.85 million tonnes. • Revenues - $NZ 7,766 million • Market conditions deteriorated at a rate not experienced previously. • Processed 1,080 million kilograms of milk solids. 11 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 12: Greater Volatility Apparent in Commodity Prices
Greater Volitility Apparent in Commodity Prices 41 months 29 months 6 months 3 months 2,500 2,000 $US 1,500 per tonne 1,000 500 15 15 14 18 months months months months 0 1990 1996 2002 12 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 13: Fonterra Milk Supply
Fonterra Milk Supply FONTERRA FARM MILK SUPPLY 70 65 01/02 60 55 00/01 VOLUME (Million Litres) 50 45 40 35 30 25 20 15 10 5 0 J1 June October May 13 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 14: Merger Benefits
Merger Benefits Merger Business 300 Case $310M 200 $M Actual $88M 100 Target $81M 0 Oct-01 May-02 Oct-02 Oct-03 Oct-04 14 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 15: New Zealand Milk – Our Consumer Business Unit Showed Strong Profitable Growth
NEW ZEALAND MILK – Our Consumer Business Unit Showed Strong Profitable Growth Year ending Year ending May 2002 May 2001* $ Millions $ Millions • Sales revenue* up 16% 5,583 4,831 +15.6% • EBIT 302 263.2 +14.7% * Proforma combination of legacy companies 15 Updated 13 August 2002 All figures NZD unles
Slide 16: New Zealand Milk Has a Significant Presence in Multiple Regions
NEW ZEALAND MILK Has a Significant Presence in Multiple Regions Revenues by Region $NZ millions Australasia 1,833 Americas 1,781 Asia 1,154 Rest of World 815 5,583 16 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 17: "Purchase Method" of Merger Accounting
“Purchase Method” of Merger Accounting 17 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 18: Accounting for the Merger
Accounting for the Merger Merger Accounting Adjustments Had a Significant Impact on Our Opening Balance Sheet Opening Balance Sheet $ million Inventory revalued upwards 874 Derivatives marked to market value (363) Brands revalued by Interbrand 1,384 Write-off goodwill and other intangibles (368) Fix
Slide 19: New Economics
New Economics 19 Updated 13 August 2002 All figures NZD unless otherwise stated
Slide 20: New Economics
New Economics • Standard and Poors have independently assessed two new measures of Fonterra Performance. – The fair value of a supplier’s share in Fonterra - $3.85. – The highest price an efficient competitor could pay for milk in New Zealand in respect of the past season (the CMP) would have been $
Slide 21: New Economics
New Economics Measure 2001/02 $kg milk solids Efficient Commodity Milk Price (CMP) $5.45 Variance between CMP and AMR (0.39) Actual Milk Return (AMR) 5.06 Return from value-added activities 0.53 Foreign Exchange hedging (0.19) Merger Accounting adjustments (0.12) Payment from Reserves 0.05 Final pay
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