Fonterra Co-operative Group Limited · NZX:FCG

Fonterra Co-operative — H1 FY2010 Earnings Presentation

25 slides from Fonterra Co-operative's earnings presentation, Mar 24, 2010

  1. Slide 1: Interim Results Briefing

    Interim Results Briefing 24 March 2010 Sir Henry van der Heyden Chairman Andrew Ferrier CEO Jonathan Mason CFO Ma ( Fonterra) Dairy for life

  2. Slide 2: Sir Henry van der Heyden, Chairman

    Sir Henry van der Heyden Chairman

  3. Slide 3: FY10 farmer cash returns on track to be second highest achieved

    FY10 farmer cash returns are on track to be the second 3 highest achieved by Fonterra 0.07 Forecast Distributable Profit of 40-50 cents per share (dividend forecast of 20-30 cents per share of which 0.01 interim dividend of 8 cents per share was declared) Milk Price Forecast $5.70 per kgMS * 14 mont

  4. Slide 4: Capital Structure Evolution

    Capital Structure Evolution 4  Steps 1 & 2 of 3 step process received almost 90% support from farmers  Steps 1 & 2 addressed some of the short-term challenges faced by the Co-operative  The third step would involve moving to a system under which farmers would buy and sell Fonterra shares among th

  5. Slide 5: Andrew Ferrier, CEO

    Andrew Ferrier CEO Dairy for life

  6. Slide 6: Highlights of half year result

    Highlights of half year result 6  Revenue totalled $7.7 billion, 3.7% lower as volume growth in product sold was more than offset by a decline in average USD selling prices and positive net FX impacts  Forecast Milk Price increased to $5.70 per kgMS from opening forecast of $4.10 per kgMS  Signif

  7. Slide 7: Strong focus on performance drivers

    Strong focus on performance drivers 7 Milk Price  More Dairy Ingredients on globalDairyTrade 1 Revenue  Optimising product mix across manufacturing sites Management  Growing market share in higher value consumer categories 2 Margin Focus  Rollouts of successful products to new markets in Asia/AM

  8. Slide 8: Powerful and diverse portfolio of dairy products

    Powerful and diverse portfolio of dairy products 8 Dairy Ingredients Value Add Ingredients Specialty Ingredients Consumer

  9. Slide 9: How do we add value to milk

    How do we add value to milk 9 External Sales Revenue Consumer $2.6bn Dairy Ingredients $3.3bn Specialty Ingredients $0.3bn Value Add Ingredients $1.5bn

  10. Slide 10: Review of strategic business units

    Review of strategic business units 10 Global Ingredients & Foodservices  Stronger demand reflecting economic recovery  Organic growth of business (e.g. formulated foods and cheese)  Expansion of DFE JV Asia/Africa & Middle East  Lower average selling price  Slightly higher volumes  Higher marg

  11. Slide 11: Sustainability and community

    Sustainability and community 11  Energy savings: cut energy use per tonne of product by 34% since 1990. Annual saving over past 5 years equivalent to electricity use of about 100,000 households  CO2 emissions: 300,000 tonnes lower than they would have been for milk processing. Making further gains

  12. Slide 12: Jonathan Mason, CFO

    Jonathan Mason CFO Dairy for life

  13. Slide 13: Key influencers of Revenue from Sale of Goods

    Key influencers of Revenue from Sale of Goods 13 $8.0bn $(1.6bn) $0.3bn $7.7bn $1bn HY09 Price Volume FX HY10 Revenue (including Revenue hedging gains)

  14. Slide 14: Sharp recovery in dairy prices will have greater influence in second half

    Sharp recovery in dairy prices will have a greater 14 influence in the second half Price globalDairyTrade Whole Milk Powder Forward Curve* US$/MT 3800 3600 1st Half FY09 Average Price 3400 3200 3000 2800 globalDairyTrade has 1st Half FY10 Average Price become the leading 2600 global reference point

  15. Slide 15: Operating costs up slightly while interest costs down

    15 Operating costs up slightly while interest costs down Operating Costs* ($M) Net Interest Costs ($M)  Operating expenses up 5.8% reflecting  Interest costs down 53% or $196m which was increased activity due to volume growth and attributable to reduced debt levels, lower interest increased advert

  16. Slide 16: Commodities & Ingredients business profits forecast to be lower

    Commodities & Ingredients business profits forecast to 16 be lower Commodities & Ingredients Underlying EBIT* ($M) Powder and Non-Powder Volatility 600 180 Price differential positive impacts 500 FY1OF 160 Based on current 400 market conditions forecast EBIT could WMP Price Index be 20-30% lower but

  17. Slide 17: ANZ had a solid first half and trend expected to continue

    ANZ had a solid first half and trend expected to 17 continue ANZ Underlying EBIT* ($M)  Higher Sales Volume 300 – Growth in yoghurt & dairy desserts in Australia FY1OF – Growth in cheese in NZ 200 Based on current market conditions forecast EBIT could – Australian Dairy Ingredients be 10-20% higher

  18. Slide 18: Asia/AME had a good first half, full year expected ahead

    Asia/AME had a good first half, full year expected to be 18 ahead of last year Asia/AME Underlying EBIT* ($M)  Higher Sales Volume 150 – Improved performance in Foodservice FY1OF 100 – Growth in market share in some Based on current market conditions regions forecast EBIT could be 10%-20% higher 12

  19. Slide 19: Latam strong first half but second half uncertain after Chilean earthquake

    Latam experienced strong first half but second half 19 uncertain following Chilean earthquake Latam Underlying EBIT* ($M)  Sales volume slightly lower 150 FY1OF  Consumer prices higher 100 Based on current market conditions forecast EBIT could be 5%-15% higher  Unfavourable FX impact due to stron

  20. Slide 20: Improvement in working capital driven by reduced inventory levels

    Improvement in working capital driven by reduced 20 inventory levels Inventory Holdings (Volume*)  Reduced inventory volumes in a challenging selling environment  Value of inventory reduced to FY09 $4.2 billion as at 31 January 2010 compared with $5.1 billion a year earlier HY10  Lower inventory

  21. Slide 21: Gearing improved

    Gearing improved 21 Gearing Ratio (%)  Total net interest bearing debt was 70% lowered from $7.4bn to $5.7bn 65% 61.5%  Improved working capital 60% 57.4%  Stronger NZD against most of 55% 52.7% 53.3% the currencies where debt was issued 50% 45%  Net injection of $263m of new 40% equity from far

  22. Slide 22: Andrew Ferrier, CEO

    Andrew Ferrier CEO Dairy for life

  23. Slide 23: Outlook

    Outlook 23  We are seeing some welcome signs of stability returning to global dairy markets  This gives us greater confidence of achieving our forecast Milk Price of $5.70 per kgMS and Distributable Profit forecast of 40-50 cents per share, with a target dividend of 20-30 cents per share  However

  24. Slide 24: Question and Answer Session

    24 QUESTION AND ANSWER SESSION

  25. Slide 25: Thank you. This event has concluded.

    25 THANK YOU. THIS EVENT HAS CONCLUDED.

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