Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — FY2003 Earnings Presentation
26 slides from Fonterra Co-operative's earnings presentation, 2003
Slide 1: Fonterra Co-operative Group Annual Results Presentation 2002/03
FONTERRA CO-OPERATIVE GROUP ANNUAL RESULTS PRESENTATION 2002/03
Slide 2: Henry van der Heyden, Chairman
Henry van der Heyden CHAIRMAN
Slide 3: Agenda
AGENDA • Payout • The Year • Highlights • Performance Measures • Ingredients • New Zealand Milk • Summary • Questions 3
Slide 4: Payout
PAYOUT •Final payout $3.63 kg/MS •$284m net •$4.1b distribution surplus MEASURE 2002/03 $kg/ms Commodity Milk Price (CMP) $3.34 Less difference between CMP and AMR $0.25 Equals estimated Actual Milk Return $3.09 (AMR) Plus return from value-added activities $0.54 Equals Total Payout $3.63 Less Indus
Slide 5: The Year
THE YEAR • Record year for the Co-operative • Very challenging market conditions • NZ$ strength a big influence on revenues • Strong underlying business performance • Very good progress structurally – the merger is well behind us • Fonterra has performed well on major shareholder performance measure
Slide 6: Highlights
HIGHLIGHTS • Record 1,148 kg/MS collected – up 3% • Record 1.94m MT production – up 11% • Record sales 2.39 million tonnes • New Zealand Milk EBIT $387m -up 28% 6
Slide 7: Highlights
HIGHLIGHTS • Operating revenue $12.5b – down 10% • Currency impact $850m = 74c kg/MS • Annualised merger benefits $206m – $31m ahead of budget • Cost reductions of $634m 7
Slide 8: Performance Measures
PERFORMANCE MEASURES • Fair Value Share up 53c to $4.38 • CMP/AMR gap down to 25c • Total Shareholder Return 16.7%* * With CMP related foreign exchange hedging. TSR without CMP related foreign exchange hedging is 10.2% • 2003/04 payout forecast remains at $3.80 8
Slide 9: Jay Waldvogel, Acting Chief Executive
Jay Waldvogel ACTING CHIEF EXECUTIVE
Slide 10: Sales Volume Trend - Ingredients
SALES VOLUME TREND - INGREDIENTS 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 J ' 00 J A S O N D J ' 01 F M A M J ' 01 J A S O N D J ' 02 F M A M J ' 02 J A S O N D J ' 03 F M A M Actual Last 12 Mnths/Mnth Budget/Mnth 10
Slide 11: End of Season NZ Inventory Volume (MT)
END OF SEASON NZ INVENTORY VOLUME (MT) 600,000 550,000 500,000 450,000 400,000 350,000 300,000 2001 ,2002 ,2003 11
Slide 12: End of Season NZ Inventory Volume (% of Sales Volume)
END OF SEASON NZ INVENTORY VOLUME (% OF SALES VOLUME) 34% 34% 32% 30% 30% 28% 26% 24% 24% 22% 2001 ,2002 ,2003 12
Slide 13: Sales Pricing Trend - Ingredients
SALES PRICING TREND - INGREDIENTS 2,500 2,400 2,300 2,200 2,100 2,000 1,900 1,800 1,700 1,600 J ' 00 J A S O N D J '01 F M A M J ' 01 J A S O N D J ' 02 F M A M J ' 02 J A S O N D J ' 03 F M A M Actual Last 12 Mnths FY Budget 13
Slide 14: Optimise Product Mix
OPTIMISE PRODUCT MIX 400 Stream Revenue per kg milksolids 350 300 250 200 150 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Wholemilk Powder Cheese Casein 14
Slide 15: Increasing Milkpowder Production
INCREASING MILKPOWDER PRODUCTION 2,000 Production - thousands of Metric Tons 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 99/00 00/01 01/02 02/03 03/04 Budget Other Products Milkpowder production 15
Slide 16: Seasonal Milk Supply in New Zealand
milksolids 0 20 40 60 80 100 120 140 160 180 Ju n- 02 Ju l-0 2 Au g- 02 Se p- 02 O ct -0 2 N ov -0 2 D ec -0 2 Ja n- 03 Fe b- 03 M ar -0 3 Ap r- 03 M ay - 03 Ju n- 03 16 SEASONAL MILK SUPPLY IN NEW ZEALAND
Slide 17: Fonterra Peak Days History
FONTERRA PEAK DAYS HISTORY Peak Day Volume 68 67 Million litres of farm milk 66 65 received 64 63 62 61 60 F01 F02 F03 Financial Year 17
Slide 18: Merger Benefits
MERGER BENEFITS Merger Business Case $310M 300 NZ$ millions annual benefits Actual $206M Target $175M 200 Actual 100 $88M 0 Oct-01 May-02 Oct-02 May-03 Oct-03 Oct-04 18
Slide 19: Ingredient Growth Businesses
INGREDIENT GROWTH BUSINESSES 75 •“Pharmaceutical Lactose”, & 70 “Health & Nutritional Solutions” Revenue in US$ millions 65 •Average EBIT 37% 60 •Average CAGR 47% 55 50 45 40 35 30 0 1 2 O O O F F F D D D A A A A A A '0 '0 '0 J J J Last 12 Mnths Budget 19
Slide 20: New Zealand Milk - Innovation
NEW ZEALAND MILK - INNOVATION • New Zealand Milk launched 180 new products over three years prior to past season • In the last 12 months New Zealand Milk has averaged two new product launches a week 20
Slide 21: New Zealand Milk - New Products
NEW ZEALAND MILK - NEW PRODUCTS • ANCHOR WAM! – fruit flavoured milk drink in the Philippines. • ANCHOR PowerMalt – launched in Sri Lanka. 21
Slide 22: New Zealand Milk
NEW ZEALAND MILK In Sri Lanka New Zealand Milk sells the equivalent of 40 glasses of milk every second or almost 3.5 million glasses of milk every 24 hours. 22
Slide 23: Statement of Performance
Statement of Performance all values NZD millions Year Ended 31 May 2003 Year Ended 31 May 2002 cents per kg cents per kg Operating Revenue 12,474 $ 10.86 13,924 $ 12.53 Commodity Milk Price 3,834 $ 3.34 6,055 $ 5.45 Less Milk Price Gap (287) $ (0.25) (433) $ (0.39) Actual Milk Return 3,547 $ 3.09 5,
Slide 24: Key Balance Sheet Information
KEY BALANCE SHEET INFORMATION Year ending Year ending Change May 2003 May 2002 TOTAL ASSETS 10,746 11,800 -1,054 Payables & Other Liabilities 1,693 2,597 -904 Net Interest Bearing Debt 4,388 4,718 -330 Equity 4,665 4,485 180 Equity Ratio 43.4% 38.0% Debt : Debt + Equity 48.5% 51.3% Equity per Kg Mil
Slide 25: Summary
SUMMARY • Strong performance in difficult conditions • Merger well behind us – right structure in place to drive good business performance • Focused on future – driving performance and value-added harder 25
Slide 26: Questions?
QUESTIONS? g Qironterra z Co-
Fonterra Co-operative Group — FY2003 Earnings Presentation on 6ix