Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — Corporate Update (May 2016)
11 slides from Fonterra Co-operative's corporate update, May 2016
Slide 1: May 2016 Business Update
FONTERRA DAIRY FOR LIFE MAY 2016 BUSINESS ees UPDATE : _
Slide 2: Milk supply in NZ lower than last season
Milk supply in NZ lower than last season 2015/16 season forecast to be 3% lower 100 90 80 Volume (m litres/day) 70 60 50 40 Season Total Milk Solids Peak Day Milk 30 —– 2013/14 1,584 kgMS 87.1 litres 20 —– 2014/15 1,614 kgMS 89.7 litres 10 —– 2015/16 1,558 kgMS (Forecast) 86.9 litres Jun Jul Aug Sep
Slide 3: Dairy supply/demand imbalance changing
Dairy supply/demand imbalance changing Supply Russia China Demand EU EU’s largest dairy 12 months 12 months imports +14% export market US production +4% Last 3 months Trade embargo remains (Jan, Feb, Mar) +39% 12 months production +1% Asia (excl China) Middle East & Africa 12 months imports +7% 12 m
Slide 4: Globally traded market continues to impact prices
Globally traded market continues to impact prices EU – more than Russia – China – imports at Asia and Middle 25 2.6bn litres embargo more normal levels East – imports additional milk increasing in 2015 (higher in growing steadily since 2013 volume of EU 2013/14 due to LME (billion) 20 exports to sup
Slide 5: Nine-month performance summary 2016
Nine-month performance summary 2016 VOLUME (LME) REVENUE GROSS MARGIN OPEX CAPEX 17.8BN $12.9BN 22% $1.9BN $634M 2%¹ 10%¹ FROM 17%¹ 3%¹ 37%¹ Ingredients Consumer & Foodservice International Farming Volume LME (BN)² 16.9 Volume LME (BN)² 3.7 Volume LME (BN)² 0.2 Volume Change3 2% Volume Change3 9% Vo
Slide 6: Ingredients volume growth and positive stream returns
Ingredients volume growth and positive stream returns Good volume growth Positive stream returns year to date in NZ 6,000 FY13 FY14 FY15 FY16 2% 5,000 16,593 16,905 4,000 Volume (m LME) USD (MT) 3,000 2,000 1,000 0 9M 2015 9M 2016 Aug 12 Aug 13 Aug 14 Aug 15 Cheddar Whole Milk Powder Page 6 © Fonter
Slide 7: Consumer and foodservice – nine-month growth
Consumer and foodservice – nine-month growth Asia Greater China Volume¹ Gross Margin² Volume¹ Gross Margin² +5% +24% 1,123 1,175 633 512 31% 37% 9M 2015 9M 2016 9M 2015 9M 2016 Oceania Latin America Volume¹ Gross Margin² Volume¹ Gross Margin² +9% +2% 1,307 1,426 439 447 21% 31% 9M 2015 9M 2016 9M 20
Slide 8: Australian Milk Price update
Australian Milk Price update • Milk price reduced to AUD5.00 from AUD5.60 per kgMS – Farmer support loan of 60 cents per kgMS – interest-bearing and linked to supply contract • Reflects reality of supply / demand imbalance in global dairy market • Reduces ingredients operating losses – Expect input
Slide 9: Strategy delivering
Strategy delivering 1 Optimise • Optimising NZ milk NZ milk DIRA 2 Build and grow Consumer – Optionality at peak GDT – More stable earnings beyond our current consumer positions 3 Deliver Foodservice – Higher returns on Foodservice potential 4 • Increasing volume through Grow our Anlene™ business va
Slide 10: Financial strength and discipline
Financial strength and discipline Solid credit rating reflects strong fundamentals Financial discipline continued A • Lower capex following planned Fitch (stable outlook) investment cycle Credit Rating A- S&P • Advance rate within guidelines (stable outlook) Debt Weighted Average As at • Strong cash
Slide 11: Outlook
Outlook • Good operating performance to continue • Early part payment of final dividend to be paid on 7 June – 10 cents – Payment date accommodates the dividend reinvestment plan • Forecast earnings remain at 45-55 cents per share. Range reflects: – Timing of completion of announced business sales i
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