Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — Investor Day (2014)
23 slides from Fonterra Co-operative's investor day presentation, 2014
Slide 1: Fonterra Market Update
FONTERRA MARKET UPDATE Robert Spurway – Managing Director Global Operations © FONTERRA CO-OPERATIVE GROUP LIMITED
Slide 2: Presentation Outline
Presentation Outline 1. Fonterra Overview 2. Global Dairy Market Overview 3. Fonterra Strategy and Ambition © Fonterra Co-operative Group Ltd. Page 2
Slide 3: Fonterra Overview
Fonterra Overview Confidential to Fonterra Co-operative Group Page 3
Slide 4: Fonterra overview
Fonterra overview • World’s largest processor of dairy products FY14 revenue (NZ$) 22.3 billion • Consumer and Foodservice operations FY14 normalised EBIT 503 million in China, Asia, Middle East, Latin (NZ$) America, Oceania Shareholders ~10,500 • International Farming Ventures – China • Access to g
Slide 5: Fonterra global ingredients and operations
Fonterra global ingredients and operations The world’s largest milk processor Fonterra’s share of global dairy exports² 21,6 48% % of Global Dairy Exports Milk Intake (million tonnes)¹ 17,1 41% 15,0 14,9 12,0 12,0 10,1 8,2 7,8 6,9 17% 15% Arla Foods Butter DMK Skim milk Nestlé Danone Freisland Dairy
Slide 6: Foodservice and branded consumer businesses
Foodservice and branded consumer businesses Greater China LATAM ASEAN/MENA © Fonterra Co-operative Group Ltd. Page 6
Slide 7: Global Dairy Market Overview
Global Dairy Market Overview Confidential to Fonterra Co-operative Group Page 7
Slide 8: The outlook for global trade in dairy products: a view to 2020
The outlook for global trade in dairy products: a view to 2020 Outlook to 2020¹ 7% <1% 1% 10% 4% 7% Europe China <1% 1% 4% Nth America 2-3% 4% India² 2% ASEAN MENA 2% 2% 1% 2% ANZ LATAM Demand volume Demand growth Supply volume Supply growth Source: Fonterra estimate 1. Current volumes are represent
Slide 9: Challenging global situation in key dairy regions
Challenging global situation in key dairy regions Russia (Demand) • EU’s largest dairy export market European Union (Supply) • Trade bans on Australia, Canada, the • Milk production up 4%¹ EU, Norway, Ukraine and the US • Russian trade bans impacting exports China (Demand) • Slow down in imports but
Slide 10: Extreme volatility impacting on pricing
Extreme volatility impacting on pricing Weighted average USD GDT cheese prices vs. WMP prices 5.500 Cheese WMP 5.000 4.500 US$ (MT) 4.000 H1 2014 3.500 3.000 H2 2014 2.500 2.000 Aug-2011 Feb-2012 Aug-2012 Feb-2013 Aug-2013 Feb-2014 Aug-2014 © Fonterra Co-operative Group Ltd. Page 10
Slide 11: Fonterra Strategy and Ambition
Fonterra Strategy and Ambition Confidential to Fonterra Co-operative Group Page 11
Slide 12: Our journey to becoming a globally relevant Co-op
Our journey to becoming a globally relevant Co-op © Fonterra Co-operative Group Ltd. Page 12
Slide 13: This is globally relevant
30 $35 Billion Billion Turnover Ambition: Litres To build a 5-6 Milk globally relevant Pools Co-op which makes a difference in the lives of 2 billion people by 2025 No. 1 Ingredients Top 3 Reputation This is globally No. 1 or 2 World relevant Class Consumer Engagement Business © Fonterra Co-operativ
Slide 14: Value creation by 'Turning the Wheel'
Value creation by ‘Turning the Wheel’ Growth in Consumer and Foodservice volumes Consumer DIRA Foodservice GDT LTSA GDT Surge Drive price achievement in Ingredients Spot Return on Capital (ROC) > WACC © Fonterra Co-operative Group Ltd. Page 14
Slide 15: Strategic priorities
Strategic priorities 1 Optimise Farm Source: Transforming our milk supply model NZ milk 2 Invest in optionality to achieve higher less volatile returns Build and grow beyond our current consumer positions Invest to support turning the wheel 3 Deliver on Foodservice potential Focus on 8 strategic and
Slide 16: Farm Source: Transforming our milk supply model
Farm Source: Transforming our milk supply model © Fonterra Co-operative Group Ltd. Page 16
Slide 17: Investing in optionality to achieve higher less volatile returns
Investing in optionality to achieve higher less volatile returns • More processing options over 110 the peak 10% more capacity at peak¹ 100 • Additional 8.2m litres per day¹ 90 80 2012/13 Volume (m litres/day) – Lichfield – 4.4m litres per day 2013/14 70 2014/15 60 – Edendale – 1.4m litres per day 5
Slide 18: Investing to support turning the wheel
Investing to support turning the wheel • Waitoa UHT facility – Commissioned with the first shipments of UHT to China – $126 million investment to meet Asian demand – Will process >100 million litres a year • Clandeboye – $72 million investment – Will double capacity to produce individual quick froze
Slide 19: Global brands aligned to benefit and technology platforms
Global brands aligned to benefit and technology platforms Strategic Platforms Global Brands Benefit Platforms Technology Platforms 1 Optimise NZ milk Natural Dairy Energy Farming Systems Uncompromising Taste, Texture & Stability 2 Build and grow beyond our current consumer positions 3 Growth & Dairy
Slide 20: Investment in global multi-hubs
Investment in global multi-hubs Milk Powders / Foodservice Whey Cheese / Whey / Infant Formula UHT / Foodservice © Fonterra Co-operative Group Ltd. Page 20
Slide 21: Recap – investments and acquisitions in 2014
Recap – investments and acquisitions in 2014 • Partial offer for up to 20% of Beingmate • Fonterra and Abbott • Whey investments • $1.6b invested/ farming hub JV with A-Ware and approved Dairy Crest since 2011 • Ingredients – Lichfield, Edendale, Pahiatua, Darfield • Foodservice – Waitoa, Clandeboye
Slide 22: Our food safety and quality roadmap
Our food safety and quality roadmap BUILDING TRUST IN SOURCE OUR FOOD SAFETY AND QUALITY ROADMAP 2014 2015 2016 2017 AND BEYOND FOCUS DRIVE ACHIEVE LEAD Making a clear Making purposeful Building absolute Taking the initiative commitment to be progress and credibility and with global accountable earn
Slide 23: Strong focus on value creation
Strong focus on value creation Improve Drive Return on Maximise Value Drivers Capital (ROC) Shareholder Wealth Volume Growth Improve ROC Earnings per Share EBIT Growth Economic Value Add Milk Price Working Capital Share Price © Fonterra Co-operative Group Ltd. Page 23