Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — Fonterra Media Conference 2014
29 slides from Fonterra Co-operative's conference presentation, Aug 27, 2014
Slide 1: Building a Globally Relevant Co-operative
BUILDING A GLOBALLY RELEVANT CO-OPERATIVE MEDIA CONFERENCE JOHN WILSON / THEO SPIERINGS LUKAS PARAVICINI / MAURY LEYLAND 27 AUGUST 2014
Slide 2: John Wilson, Chairman
J) OHN WILSON CHAIRMAN Dairy for life
Slide 3: Three Major Announcements Today
THREE MAJOR ANNOUNCEMENTS TODAY • Forecast Farmgate Milk Price • Investment in NZ processing capacity and optionality • Global partnership with Beingmate
Slide 4: Forecast Farmgate Milk Price Maintained
FORECAST FARMGATE MILK PRICE MAINTAINED • $6 per kgMS for 2014/15 season • Estimated dividend range of 20–25 cents per share* • Forecast Cash payout of $6.20 – $6.25 * Estimated dividend based on zero ingredients stream returns at this early stage in the season.
Slide 5: Investment in NZ Processing Capacity and Optionality
INVESTMENT IN NZ PROCESSING CAPACITY AND OPTIONALITY 120 100 10% more capacity at peak* • More processing options over the peak Volume (m litres/day) • Additional 8.2m litres per day* 80 2012/13 – Lichfield – 4.4m litres per day 2013/14 60 2014/15 – Edendale – 1.4m litres per day – Pahiatua – 2.4m l
Slide 6: Theo Spierings, CEO
THEO SPIERINGS CEO OVERVIEW OF FONTERRA AND BEINGMATE GLOBAL PARTNERSHIP
Slide 7: Building on Our Commitment To…
BUILDING ON OUR COMMITMENT TO… • Invest in globally integrated supply chains – from grass to glass • Grow volumes of high value infant formula product from NZ • Be part of China’s dairy industry and contributing to its development INTEGRATED SUPPLY CHAIN
Slide 8: China – No 1 Strategic Market
CHINA – NO 1 STRATEGIC MARKET • One of the world’s largest markets for dairy products • Fonterra’s business in China is already significant with annual revenue of NZ$5.5 billion
Slide 9: China Infant Formula Demand Expected to Double in Years
CHINA INFANT FORMULA DEMAND EXPECTED TO DOUBLE IN 5 YEARS CHINA INFANT FORMULA MARKET POTENTIAL NZ$18bn today NZ$33bn by 2017 Source: Euromonitor
Slide 10: Maury Leyland, MD Strategy
MAURY LEYLAND MD STRATEGY STRATEGIC PATHS AND MULTI-HUB STRATEGY
Slide 11: Aligned with Fonterra's Strategy
ALIGNED WITH FONTERRA'S STRATEGY TURNING THE WHEEL 1 Optimise NZ milk Consumer DIRA 2 Build and grow beyond our current consumer positions Foodservice 3 GDT Deliver on Foodservice potential 4 Grow our Long-Term Supply Anlene business Agreements 5 Develop leading positions in paed & materna
Slide 12: Aligned with Strategy – Multi-Hubs
ALIGNED WITH STRATEGY – MULTI-HUBS
Slide 13: Theo Spierings, CEO: Strategy in Action and Global Partnership
THEO SPIERINGS CEO STRATEGY IN ACTION AND GLOBAL PARTNERSHIP
Slide 14: Fonterra's Strategy in Action
• Platforms to grow whey specialty ingredients • A-Ware JV and Dairy Crest alliance • Global Fonterra and Beingmate partnership • Fonterra and • Partial Tender Beingmate JV to Offer for 20% of acquire Darnum Beingmate • Higher infant • Anmum™ formula volumes distribution agreement FONTERRA’S • Highe
Slide 15: Beingmate: Strong Fit in Premium Category
BEINGMATE: STRONG FIT IN PREMIUM CATEGORY • Market share of 10% • Extensive distribution network – 30 branches across China – More than 1,000 stores – 20,000 maternal service consultants • 7,000 employees • 6 state-of-the-art plants and logistics centres
Slide 16: Optimising Australian Potential
OPTIMISING AUSTRALIAN POTENTIAL • Fonterra and Beingmate establish JV to purchase Darnum in Australia • Darnum can produce 50,000 MT of infant formula per annum • Fonterra retains day-to-day operations of the plant
Slide 17: Driving Anmum Growth in China
DRIVING ANMUM GROWTH IN CHINA • Access to Beingmate’s extensive distribution and sales network • Fully integrated supply chain from NZ to Chinese consumers • Forecast annual sales growth expected to exceed NZ$100m per annum by 2018 • Fonterra earns royalty fee from licensing of Anmum™ brand • Execut
Slide 18: Linking China to Valuable European Milk Pools
LINKING CHINA TO VALUABLE EUROPEAN MILK POOLS • Fonterra and Beingmate partnership provides larger platform to grow whey specialty ingredients volumes from Europe – JV with A-Ware in Netherlands: building new plant in Heerenveen, Netherlands – Alliance with Dairy Crest in the UK • Potential to exten
Slide 19: Increasing New Zealand Capacity and Optionality
INCREASING NEW ZEALAND CAPACITY AND OPTIONALITY • Total capacity increases by 8.2m litres per day • New Lichfield milk powder drier and distribution centre – 4.4m litres per day NZ$755m • Three new plants at Edendale – 1.4m litres per day • NZ$200m drier at Pahiatua underway – 2.4m litres per day
Slide 20: Maximising Shareholder Return
MAXIMISING SHAREHOLDER RETURN • Turning more NZ milk into higher value products • Optimising use of Co-op’s global assets • Investing in optionality of NZ assets to improve returns • Building fully integrated global supply chain • Financing from solid balance sheet position – strong gearing maintain
Slide 21: Lukas Paravicini, CFO
LUKAS PARAVICINI CFO STRONG PARTNER AND TRANSACTION PROCESS
Slide 22: About the Partnership
ABOUT THE PARTNERSHIP • New JV to acquire Fonterra’s Darnum plant in Australia • Distribution agreement of Fonterra’s Anmum™ brand • Partial tender offer from FONTERRA INVESTMENT NZ$615m* Fonterra to buy up to 20% stake in Beingmate * Including proceeds from JV in Australia
Slide 23: Beingmate – High Quality Business, Good Level Profitability
BEINGMATE – HIGH QUALITY BUSINESS GOOD LEVEL PROFITABILITY Revenue* (NZ$ million) CAGR 14% 1,185 1,038 916 EBITDA* (NZ$ million) EBITDA… 15.4% 16.2% 13.5% 191 159 2011A 2012A 2013A 123 2011A 2012A 2013A *Converted at spot rate of 5.16
Slide 24: Key Transaction Parameters and Offer Process
KEY TRANSACTION OFFER PROCESS PARAMETERS Partial Tender Offer: RMB 18 per • Beingmate group committed to share support Fonterra’s partial tender offer Financing: Additional debt - strong • Fonterra will offer all shareholders balance sheet an opportunity to sell into a Partial Tender Offer for up to
Slide 25: Balance Sheet Strength Maintained
BALANCE SHEET STRENGTH MAINTAINED Gearing Ratio* Pro-forma 2015 forecast 44.9% 45.1% 41.8% 42.3% 42.4% gearing to increase by 39.1% 39.6% 2.7% to 45.1% – Includes Beingmate partnership – Includes forecast additional capex 2010 2011 2012 2013 2014F 2015FProforma… * Gearing is measured in terms of eco
Slide 26: Theo Spierings, CEO: Driving Strategy
THEO SPIERINGS CEO DRIVING STRATEGY
Slide 27: Investments Driving Strategy in Action
INVESTMENTS DRIVING STRATEGY IN ACTION • Partial offer for 20% • Whey investments of Beingmate with A-Ware and • Fonterra and Abbott Dairy Crest Farming Hub JV • $1.8bn invested since 2011 • Dairy Partners of • Ingredients –Lichfield, America reshape • 10% investment in Edendale, Pahiatua, Bega Chee
Slide 28: Summary
SUMMARY 30,000 MT Whey products 1 billion litres of milk from Fonterra Farm Hubs in China 50,000 MT infant formula from Darnum $100m Anmum™ infant formula sales by 2018 Increased capacity of 8m litres per day
Slide 29: Dairy for life
~~ Dairy for life BEIN@MATE
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