Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — FY2012 Earnings Presentation
22 slides from Fonterra Co-operative's earnings presentation, Sep 26, 2012
Slide 1: 2012 Annual Results
ONE YEAR. YEAR 2012 ANNUAL RESULTS © FONTERRA CO-OPERATIVE GROUP LTD 1
Slide 2: Sir Henry van der Heyden, Chairman
SIR HENRY VAN DER HEYDEN CHAIRMAN © FONTERRA CO-OPERATIVE GROUP LTD 2
Slide 3: Overview
OVERVIEW • Highlights • Business performance • Update on strategy • Questions and answers © FONTERRA CO-OPERATIVE GROUP LTD 3
Slide 4: Payout
PAYOUT 7.90 0 30 0.30 6.37 6.40 0.27 0.32 Dividend (1) 7.60 Farmgate Milk Price (2) 6.10 6.08 Retentions(3) 2010 2011 2012 0.23 0.25 0.10 N t Notes: (1) Cents per share (2) $ per kgMS. (3) Retentions are calculated as net profit after tax attributable to Co-operative Shareholders divided by number o
Slide 5: GDT Price Movements
GDT PRICE MOVEMENTS GDTTM Trade Weighted Index 1,600 1 600 March 2010 = 1000) 1,400 1,200 1,000 800 ce Index (M 600 400 Pric 200 0 © FONTERRA CO-OPERATIVE GROUP LTD 5
Slide 6: Record Milk Collections
RECORD MILK COLLECTIONS Fonterra’s New Zealand season milk volume 90 2009/10 80 2010/11 Volume (milllion litres//day) 70 2011/12 60 50 40 30 20 V 10 0 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Source: Fonterra Note: Volumes represent a six day moving average of daily production © FONTERRA
Slide 7: Trading Among Farmers
TRADING AMONG FARMERS LATE OCTOBER/ LATE OCTOBER/ END NOVEMBER EARLY NOVEMBER LATE NOVEMBER • Fonterra Offer • Demand and • Fonterra Documents and Supply Offer Shareholders’ Annual Report period Market and a ailable available Fonterra Shareholders’ Fund begin operating © FONTERRA CO-OPERATIVE GROUP
Slide 8: Theo Spierings, Chief Executive
THEO SPIERINGS CHIEF EXECUTIVE © FONTERRA CO-OPERATIVE GROUP LTD 8
Slide 9: FY2012 Highlights
FY2012 HIGHLIGHTS • Normalised EBIT of $1,028 million, reflecting: NZD million FY2011 FY2012 Change Total Sales Volume (000 MT) 3,866 3,941 1.9% – Higher price achievement above GDT – ANZ impacted by challenging trading Revenue 19,871 19,769 (0.5%) conditions Normalised EBITDA(1) 1,494 1,520 1.7% –
Slide 10: FY2012 – NZ Milk Products
FY2012 – NZ MILK PRODUCTS Normalised EBIT ($m)(1) • Strong normalised EBIT growth up 23% • Sales volume up 7% to 2.8 million MT 515 • 7% increase in contribution margin to $385 per 420 Volume MT G h(2) Growth 6.6% Normalised EBIT Growth 22.6% FY2011 FY2012 Notes: (1) FY2011 has been restated to refl
Slide 11: Major Factors Driving NZ Milk Products EBIT
MAJOR FACTORS DRIVING NZ MILK PRODUCTS EBIT Price above GDT • Shorter-term fixed price Indicator – WMP/WMP GDT customer t contracts t t • Prices above GDT • Adding value for key customers • Favourable impact from product mix Source: Fonterra estimates © FONTERRA CO-OPERATIVE GROUP LTD 11
Slide 12: FY2012 – ANZ
FY2012 – ANZ Normalised EBIT ($m)(1,2) • Lower result reflects challenging trading conditions diti 256 • Higher trade and promotional spend to Volume maintain market share 204 G h(3) Growth • Good performance from foodservice -12.5% • Stable performance in New Zealand and in ingredients Normalised E
Slide 13: FY2012 – Asia, Africa and Middle East
FY2012 – ASIA, AFRICA AND MIDDLE EAST Normalised EBIT ($m)(1) • Strong demand • Currency impact on normalised EBIT 194 • EBIT growth of 8% (constant currency) 193 Volume G h(2) Growth • Anlene and Anmum performed well in Vietnam, Hong Kong, Philippines and 3.1% Malaysia Normalised • Strong volume gr
Slide 14: FY2012 – Latam
FY2012 – LATAM Normalised EBIT ($m)(1) • Soprole normalised EBIT up 6% to $83 million • Latam normalised EBIT growth of 16% 129 (constant currency) Volume • Product innovation G h(2) Growth • DPA related income of $46 million up 12%(1) 2.2% 119 Normalised EBIT Growth 8.4% FY2011 FY2012 Notes: (1) FY
Slide 15: Jonathan Mason, Chief Financial Officer
JONATHAN MASON CHIEF FINANCIAL OFFICER © FONTERRA CO-OPERATIVE GROUP LTD 15
Slide 16: Strong Balance Sheet Position
STRONG BALANCE SHEET POSITION Economic Gearing (D/D+E)(1) 43% 42% 41.8% 42% 41% 41% 40% 40% 39.1% 39% 39% 38% 38% FY2011 FY2012 Note: (1) Gearing is measured as economic net interest bearing debt over economic net interest bearing debt plus equity (reflecting debt hedging in place at balance date).
Slide 17: Capital Expenditure
CAPITAL EXPENDITURE $m FY2010 FY2011 FY2012 Actual Actual Actual NZ Milk Products 378 470 645 Australia and New Zealand 74 135 181 Asia, Africa and Middle East 13 17 19 Latam 27 22 43 Total capital expenditure 492 644 888 © FONTERRA CO-OPERATIVE GROUP LTD 17
Slide 18: Theo Spierings
THEO SPIERINGS © FONTERRA CO-OPERATIVE GROUP LTD 18
Slide 19: Strategy Refresh Update
STRATEGY REFRESH UPDATE Our Vision and Story What we stand for Cash Generators Growth Generators New Business ‘Must do’ ‘Can do’ ‘Want to do’ New Zealand Milk China India Middle-East & North Africa ASEAN Advanced Nutrition What we (MENA) go for Latin America ((LATAM)) O ti i Optimise ANZ Out-of-Home
Slide 20: Progress on Strategy Refresh
PROGRESS ON STRATEGY REFRESH Strategic Paths Highlights • NZDL 1 Optimise NZ milk • First milk through Darfield Build and grow beyond our EVERYDAY 2 currentt customer t positions iti • Announced packing and blending plant in Indonesia Deliver on foodservice OUT-OF-HOME 3 potential • Shanghai Innovat
Slide 21: Summary
SUMMARY Payout • $6.40 – 19% down Volume • Milk volumes up 11% • Sales volumes up 2% Value • Normalised EBIT up 2% • NZMP normalised EBIT up 23% • ANZ normalised li d EBIT d down 20% • Focus on sales mix / costs Velocity y • New structure in place • Strategy deployment underway – around 90 projects
Slide 22: Global Situation
GLOBAL SITUATION • August: Farmgate Milk Price of $5.25 per kilogram of milksolids • Recent price improvement on GDT eroded by high NZD • TAF blackout • No earnings updates prior to Prospectus being lodged © FONTERRA CO-OPERATIVE GROUP LTD 22
Fonterra Co-operative Group — FY2012 Earnings Presentation on 6ix