Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — FY2025 Earnings Presentation
42 slides from Fonterra Co-operative's earnings presentation, Nov 11, 2025
Slide 1: Review of FY25 Performance
Review of FY25 Performance Fonterra Co-operative Group November 2025
Slide 2: Important Notice
Important Notice Declarations This report is dated 11 November 2025 and has been prepared by Northington Partners at the any such information being inaccurate, incomplete, unreliable or not soundly based or for any errors request of the Fonterra Co-operative Council (“FCC”) on behalf of Fonterra Co-
Slide 3: FY25 Highlights
FY25 Highlights Continuation of Fonterra reported normalised FY25 earnings from Group operations of 71 cents per share. This was slightly above the midpoint of its guidance (65 – 75 cents). While it is also in 1 Strong Earnings line with FY24’s earnings outcome of 71 cents per share, the FY25 result
Slide 4: Table of Contents
Table of Contents Section Page Section 1 FY25 Results Review 5 Financial Performance 6 Return on Capital 9 Financial Position 12 Outlook 15 Section 2 Mainland Divestment 17 Mainland Divestment Summary 18 Post Divestment Fonterra Outlook 19 Appendix 1 – Flexible Shareholding 21 NZ Milk and Shareholde
Slide 5: FY25 Results Review
Section 1: FY25 Results Review
Slide 6: Total Group Financial Performance
Total Group Financial Performance Fonterra reported FY25 earnings (EBIT) from continuing operations of $1,560m, a 16% increase on FY24’s results. Continuing operations net profit after tax was down 4%, to $1,004m, reflecting a significant change in tax treatment. NZ$ Million (Continuing Operations)
Slide 7: Financial Performance by Channel & Segment
Financial Performance by Channel & Segment Although price relativities narrowed when compared to FY24, earnings from the Ingredients channel improved due to strong margins and favourable hedging in the Non-Reference portfolio. Foodservice’s higher sales volumes contributed to improved earnings despi
Slide 8: Price Relativities
Price Relativities Price relativities between reference and non-reference products narrowed significantly in FY25 from the highs of FY24-25. Historical Price Relativities (Non-Reference / Reference Product Prices) Relationship Between Price Relativities and the Ingredients Segment Gross Margin 1.70
Slide 9: Return on Capital
Return on Capital A continuation of strong earnings in FY25 resulted in a return on capital employed of 10.9% (12.5% adjusted for tax changes), down on 11.3% in FY24, but above both the previous four-year average of 9.3% and Fonterra’s FY25 target of 8% - 10%. Historical Return on Capital (Based on
Slide 10: Final Milk Price
Final Milk Price Fonterra declared a final 2024/2025 Farmgate Milk Price of $10.16 per kgMS and has estimated the 2025/26 at $9.00 - $11.00, with a mid-point of $10.00 per kgMS1. FY24 – FY25 FGMP Bridge ($ per kgMS) 2024/2025 Farmgate Milk Price Guidance Range ($ per KgMS) 11.0 $10.16 10.5 10.16 $7.
Slide 11: Total Payout and Payout Ratio
Total Payout and Payout Ratio Total payout to fully shared up farmers for FY25 has increased by $2.35 to $10.73. This reflects both a higher FGMP and an increased dividend. Normalised Earnings Per Share and Payout Ratio Total Payout2 Excludes 50c Includes 15c $10.73 capital return special dividend $
Slide 12: Financial Position
Financial Position Fonterra’s balance sheet remains conservatively managed, underpinned by modest debt levels. NZ$ Million FY25 FY24 % Change Adjusted Net Debt (NZ$ million) and Gearing Ratio (%) Assets 44.2% Cash and Cash Equivalents 309 540 (43%) 42.4% 38.5% Receivables 1,462 2,123 (31%) 28.8% Inv
Slide 13: Debt Position
Debt Position Fonterra’s net debt and leverage position has remained at recent historical lows, providing financial flexibility and overall balance sheet resilience. Net Debt Bridge (NZ$m) Debt / EBITDA1 $2,605m $280m $2,620m 4.3x $997m 3.3x 3.2x 2.7x $706m 1.3x 1.2x $376m 1.1x ($8m) ($2,336m) FY24
Slide 14: Capital Expenditure & Divestments
Capital Expenditure & Divestments Total capital invested during FY25 was $930m, representing an increase of $210m compared to the prior year. Historical Capital Invested by Type (NZ$ million) There were no divestments to note in FY25, with the potential Mainland divestment expected to 930 complete i
Slide 15: FY26 Outlook
FY26 Outlook Fonterra’s opening EPS guidance for FY26 of 45c – 65c per share share implies an underlying performance broadly consistent with FY25 on a normalised continuing operations basis. Earnings Per Share (Normalised) FY26 Year-to-Date Price Relativities 5,500 FY25 H2 FY26 H1 On a Continuing Op
Slide 16: Operational Efficiency Metrics
Operational Efficiency Metrics Fonterra reports on two efficiency targets focusing on operating costs and manufacturing costs per kgMS. These efficiency metrics were introduced as part of Fonterra’s drive to enhance efficiencies and reduce its cost base. Cash Operating Expenses per kgMS Collected Co
Slide 17: Mainland Divestment
Section 2: Mainland Divestment
Slide 18: Mainland Divestment Summary
Mainland Divestment Summary The Mainland business being sold to Lactalis combines the integrated businesses in Oceania and Sri Lanka with the global Consumer channel (ex-China) and the MEA Foodservice business. Mainland Metrics Assessed Multiple Range vs Mainland FY25 Transaction Multiples2 EV/EBITD
Slide 19: Post Divestment Outlook
Post Divestment Outlook Fonterra expects that EBIT will be back to FY25 levels within 3 years despite the divestment of Mainland. Although this implies a ~17% increase on FY25 EBIT from continuing operations, we estimate the majority of the increase will be derived from cost savings. Fonterra has st
Slide 20: Post Divestment Fonterra Earnings and P/E Multiple
Post Divestment Fonterra Earnings and P/E Multiple Fonterra shares currently trade at a FY26 mid-point forecast earnings multiple of ~7.2x in the farmer’s market (after adjusting for the impact of the Mainland divestment). This compares to a 5-year average multiple of ~7.7x. The table below assesses
Slide 21: Appendix 1 – Flexible Shareholding
Appendix 1: Appendix – Flexible Shareholdings Flexible Shareholding
Slide 22: Competition for NZ Milk and Shareholder Flexibility
Competition for NZ Milk and Shareholder Flexibility Fonterra’s capital structure changes and strong financial performance should support greater flexibility for farmers while maintaining Fonterra’s competitiveness for milk supply. Given that Fonterra’s revised strategy is designed to optimise the va
Slide 23: Flexible Shareholding
Flexible Shareholding Farmer shareholding levels relevant to milk supply have changed since the introduction of Fonterra’s flexible shareholding structure 18 months ago. Fonterra’s Flexible Shareholding was announced in May 2021 and introduced in April 2023. Since then, While it is difficult to dete
Slide 24: Flexible Shareholding Summary
Flexible Shareholding Summary A new Flexible Shareholding structure came into effect during FY23. The key changes between Since Flexible Shareholding came into effect on 28th March 2023, there hasn’t been any material the old structure and the new structure are summarised in the table below. change
Slide 25: Restricted Market Discount
Restricted Market Discount The restricted market discount has exhibited significant volatility over the financial year, although current levels are of ~30% are consistent with the average discount since implementation of the flexible shareholding changes. Daily Share Price Comparison1 Discount of FC
Slide 26: Appendix 2 – Supporting Information
Appendix 2: Supporting Information
Slide 27: Continuing and Discontinuing Operations
Continuing and Discontinuing Operations NZ$ Million FY24 FY25 Continuing Discontinued Total Continuing Discontinued Total Operations Operations Group Operations Operations Group Sales Volume (‘000 MT) 3,034 495 3,529 3,074 414 3,488 Total Revenue 20,423 2,571 22,994 24,111 2,339 26,450 Cost of Goods
Slide 28: FY25 Integrated Scorecard
FY25 Integrated Scorecard FY23 FY24 FY25 FY25 Key Performance Indicator (KPI) Actual Actual Actual Scorecard Serious harm1 18 16 6 12 Percentage of Health, Safety and Wellbeing priority actions fully completed by People 76% 77% 96% 95% due date Culture Measure 79 79 81 81 GHG emissions (Scope 1,2)2
Slide 29: FY26 Integrated Scorecard
FY26 Integrated Scorecard FY24 FY25 FY26 Key Performance Indicator (KPI) Actual Actual Scorecard Serious harm1 16 6 5 People Quality of post-Health, Safety and Wellbeing incident actions 0.41 0.40 0.6 Culture Measure 79 81 80 GHG emissions (Scope 1,2)2 (18.5)% (20.7)% (26.7)% Nature Additional perce
Slide 30: Historical Financial Information
Historical Financial Information Sales Volume (‘000 MT) Total Assets (NZ$ million) 4,313 4,180 4,123 4,152 4,069 4,102 3,924 3,973 17,842 18,099 17,916 18,781 18,601 3,529 17,118 17,284 17,341 16,679 17,526 3,488 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY
Slide 31: Reported EBIT Bridge by Segment and Channel
Reported EBIT Bridge by Segment and Channel Reported EBIT Bridge by Channel $45m $94m $28m $1,732m $49m $21m $93m ($112m) ($13m) $1,527m Reported Core Operations Global Markets Greater China Core Operations Global Markets Greater China Continuing Operations Discontinued Reported Normalisation Operat
Slide 32: Summary of Normalisations
Summary of Normalisations Total Group Impact of FY25 Normalisations Item Impact on EBIT Impact on Gearing Additional costs increase net debt while the sale Divestment and separation costs relating to the Mainland ▲ $106m in total normalised costs ▼ proceeds will eventually be partially used to repay
Slide 33: Reference vs Non-Reference Price Relativity Proxies
USD / MT USD / MT Source: GDT - -500 500 -1,000 1,000 1,500 2,000 2,500 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Oct-13 Dec-13 Oct-13 Feb-14 Dec-13 Apr-14 Feb-14 Jun-14 Apr-14 Aug-14 Jun-14 Oct-14 Aug-14 Dec-14 Oct-14 Feb-15 Dec-14 Apr-15 Feb-15 Jun-15 Apr-15 Aug-15 Jun-15 Oct-15 Aug-15 Dec-15 Oc
Slide 34: Historical Total Payout
Historical Total Payout Total Payout (Nominal NZ$ per kgMS) 10 Year Average Payout of $7.62 per kgMS $10.73 $9.50 $8.50 $8.72 $7.66 $7.90 $7.74 $8.38 $7.19 $6.37 $6.40 $6.52 $6.79 $6.35 $6.16 $5.33 $5.20 $4.65 $4.59 $4.25 $4.10 $4.46 $4.30 $3.60 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Slide 35: Historical Earnings per Share Performance vs Guidance
Historical Earnings per Share Performance vs Guidance Historical Earnings Per Share Guidance Midpoint vs Actual Normalised Earnings Per Share 90 80 70 FY23 FY24 60 FY17 = Actual Normalised EPS FY16 FY18 FY25 at end of guidance period 50 40 FY21 FY22 30 FY19 FY20 20 10 0 Review of FY25 Performance |
Slide 36: Comparable Company Performance
Comparable Company Performance Fonterra is very different to other entities operating in the NZ dairy sector and to overseas dairy co-ops and companies. This is due to a range of factors including the DIRA regulatory regime, scale and product mix. Arguably the most comparable entities to Fonterra ca
Slide 37: Comparable Company Performance (Continued)
Comparable Company Performance (Continued) Dairy Companies Revenue EBIT (RHS) Revenue EBIT (RHS) 200,000 35,000 16,000 1,800 30,000 14,000 1,600 150,000 12,000 1,400 25,000 NZ$ Millions 1,200 NZ$ Millions NZ$ Millions NZ$ Millions 10,000 20,000 1,000 100,000 8,000 15,000 800 6,000 600 10,000 50,000
Slide 38: EBIT Margin and Gearing Ratio
EBIT Margin Gearing Ratio Dairy Co-ops Dairy Co-ops 6.9% 23.9% 7.2% 16.6% 4.2% 52.2% 4.2% 36.4% Average EBIT Margin Average Gearing (excl. (excl. Fonterra) 5.2% Fonterra) 35.1% Dairy Companies Dairy Companies 12.8% 46.2% 3.2% 23.2% 17.0% 57.6% 12.9% 28.7% Average EBIT Margin Average Gearing 11.5% 38
Slide 39: Gross Margin and Operating Expenses to Sales
Gross Margin Operating Expenses to Sales Dairy Co-ops Dairy Co-ops 15.8% 9.8% 43.5% 36.4% 21.5% 17.3% 16.0% 11.9% Average Gross Margin Average OPEX to Sales (excl. Fonterra) 27.0% (excl. Fonterra) 21.9% Dairy Companies Dairy Companies 49.7% 36.9% 33.8% 30.6% 46.9% 30.0% 51.4% 38.4% Average Gross Mar
Slide 40: Share Price Performance – Dairy Competitors
Share Price Performance – Dairy Competitors • The share price data below provides comparisons to New Zealand and international dairy competitors to illustrate the performance of Fonterra’s share price against some of the company’s peers. • Fonterra is the only entity within our Co-op set that is bot
Slide 41: Abbreviations & Definitions
Abbreviations & Definitions Term Definition CAGR Compound average growth rate Capex Capital expenditure Co-op, Group or the Company Fonterra Co-operative Group Limited CY Calendar year ending 31 December DIRA Dairy Industry Restructuring Act DPA Brazil Dairy Partners Americas Brazil EBIT Earnings be
Slide 42: Northington Partners contact details
Auckland Christchurch Level 33, Vero Centre L4, White Fox & Jones 48 Shortland Street 70 Gloucester Street PO Box 105-384 PO Box 13-804 Auckland 1143 Christchurch 8011 www.northington.co.nz
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