Fonterra Co-operative Group Limited · NZX:FCG
Fonterra Co-operative — H1 2011 Earnings Presentation
13 slides from Fonterra Co-operative's earnings presentation, Mar 23, 2011
Slide 1: 2011 Half Year Result
2011 Half Year Result 23 March 2011 Media Briefing
Slide 2: Result highlights
Result highlights • On track for one of the best ever payouts to farmer shareholders – Forecast Payout range $7.90-$8.00 (before retentions), $7.75-$7.80 (cash), made up of: • Forecast Milk Price $7.50 per kgMS • Forecast Profit $550-$690 million (40-50 cents per share) • Target Dividend 25-30 cents
Slide 3: Generating strong returns
Generating strong returns 7.90 7.90-8.00 6.70 4.46 4.10 1. Since FY2010, Distributable Profit is recognised on a $ per share basis. Prior to FY2010, Distributable Profit was recognised on a $ per kgMS basis. 2. Milk Price is $ per kgMS. Page 3
Slide 4: Financial result snapshot
Financial result snapshot Movement Movement 1H 2011 $m 1H 2010 $m $m % Revenue 9,356 7,738 1,618 21% Cost of NZ Milk1 (6,561) N/C Other purchases/inventory (1,354) N/C movement2 Operating expenses (1,031) (1,006) (25) (2%) Other operating income 49 222 (173) (78%) EBIT3 492 N/C Net finance costs (19
Slide 5: Review of business segments
Review of business segments Asia/Africa & Middle East Continuing to focus on higher value brands and nutritional products Rising disposable incomes, strong economies and increasing nutritional awareness have created a favourable climate for Fonterra’s key brands Commodities & Ingredients • Earni
Slide 6: 1H 2011 revenue and normalised EBIT by business segments
1H 2011 revenue and normalised EBIT by business segments Segment Revenue Normalised EBIT1 ($m) ($m) 1. After excluding non-recurring items. Does not include Group eliminations of $5 million. Page 6
Slide 7: C&I normalised earnings broadly in line with FY10
C&I normalised earnings broadly in line with FY10 C&I Normalised EBIT ($m) • Reduce fixed price contracts with customers • More dynamic product mix • Continue drive for operating efficiencies across manufacturing and supply chain • Investing in our position as a higher value, more highly differentia
Slide 8: The Milk Price methodology
The Milk Price methodology • Price paid to NZ farmers based on the Milk Price Manual, which assumes: – All of Fonterra’s NZ milk is processed into a basket of mostly powder commodity products and sold at market prices – Costs of processing are based on a notional efficient competitor • Aggregate Mil
Slide 9: Our consumer businesses earnings are broadly on track with FY10
Our consumer businesses earnings are broadly on track with FY10 Normalised EBIT $m 1 14 month period Page 9
Slide 10: Gearing has improved substantially
Gearing has improved substantially • 48.5% at 31 Jan 11 vs 54.3% at 31 Jan 10 • Half year comparison more relevant than full year because of seasonality factors KEY DRIVERS • Share issues • Dividend Policy • Interim profit recorded Gearing is measured in terms of economic net interest bearing debt o
Slide 11: Strategic Priorities
We are focused on executing our strategy Optimising the core NZ Deliver sustainable 1 co-operative performance by… ingredients business and managing volatility Strategic Priorities Investing in our existing Grow lasting customer 2 partnerships by… and future platforms for growth Continuing to grow o
Slide 12: Priorities for second half FY11
Priorities for second half FY11 • Drive further earnings improvement from existing resources and platforms – Continue initiatives to simplify core NZ milk processing business – Address portfolio mix and contract terms to reduce earnings impact even when prices are rising – Seek improved margins on p
Slide 13: Outlook for Full Year
Outlook for Full Year • Forecast Distributable Profit (=NPAT) of $550m-$690m compared with $685m NPAT in FY10 – Normalised earnings expected to be broadly in line with last year – Some one-off profit benefits to be confirmed during 2H • Aggregate expected to be lower than indicated in February refor
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