March 19, 2025 • 5 mins
Fonterra's chief executive says he's "bloody proud" of the co-op's excellent half-year result with an increased net profit and interim dividend.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Conterra reports an increase net profit and interim dividend. That
is the headline I read this morning on business desk.
To run us through the numbers, the chief executive Miles Hurrell.
Miles were all these sort of in line with market expectations.
Speaker 2 (00:15):
Yeah, good upening, Jamie. Are they're on line with probably
the expectations that we put out a week or ten
days ago when we increased our guidence. So as we
went to close out the half year the numbers that
it became obvious to us that actually we'd had a
very good half year and therefore the full year was
a little bit undercooked in terms of the guidance we
had out there. So it's the reason we came to market,
so not a jar from where we were ten days ago,
(00:38):
but from where we opened the season on the back
of a pretty low milk price last year, through a
ten dollars milk price this year, and then guidance at
fifty five seventy five. It's a pretty good result from
the team and I'm bloody proud of it.
Speaker 1 (00:50):
Well, so you should be. Let's have a look at
some of these numbers. Let's crunch the numbers. The forecast
milk price. You've just narrowed the band down there. It's
now between nine to seventy ten thirty ten dollars smiles
Hurras locked and loaded there.
Speaker 2 (01:04):
Yeah, if there's a few months ago before we close
the books completely into July. But you know, we feel
confident as we sit here today. You know, milk milk's
up across the country. Not we're seeing that it's pretty
dry at the moment, but milk milk's still up across
the country, and you know, buyers know that, and so
we just need to keep an eye on that a
little bit and make sure that it's sort of doesn't
catch us out at the last hurdle. But as we
sit here today, ten bucks ten bucks look looks a
(01:26):
pretty solid position for us.
Speaker 1 (01:27):
Yet, just on those milk volumes, is the North Island
drought not going to take its toll there?
Speaker 2 (01:33):
Well? Interesting enough, milk's still holding up, which suggests to
me there's obviously but a supplementary feed going and I
guess at ten dollars farmers will make their own calls
on that. So you know, it's certainly not coming off
at the rate we would have historically that seed will
get to a point where it just doesn't work economically,
and farmers will make the call and we'll see it.
We'll set up peel off quite quickly. But as we're
(01:53):
city today and it's holding up pretty well all things considered.
Speaker 1 (01:57):
Fonterra farmer shareholders get paid in two different ways. One
is for the milk price. The other one is the
dividend on their co op shares. Now, the interim dividend
is twenty two cents per share, up from fifteen cents
last year. But the difference is, and this is only
half your dividend, well, this is tax paid.
Speaker 2 (02:15):
You're fully impewed it to twenty two cents versus last
year's fifteen. I mean, I guess the headline number is
their fifteen last year to close on thirty or thirty
and a half cents if you'd talk of tax paid position.
So I guess that's a reflection of that our tax
losses that we had accumulated over many years are no
longer and so farmers should see that as a positive
that twenty two cents tax paid is a great position.
Speaker 1 (02:37):
Now you're going to smash the record for the best
dividend because the previous best, by my reckoning, anyhow was
fifty five cents last season. Of course that wasn't tax paid,
so you're going to beat that comfortably.
Speaker 2 (02:50):
Well, that's certainly the aim, and our team's got the
shoulders of the wheel of the next few months to
ensure we do close out the year in a positive fashion,
and we sit here today feeling good about that. You
have to pick up any of the newspapers on maintru
media to see some of the macroeconomic positions that are
out there that dur politics that are in play, and
so we need to watch that carefully. We've navigated it
very well today and see no reason why we can't
(03:13):
into the future. But you were in a different world
than we were a few years ago, that's for sure.
Speaker 1 (03:16):
What about the advance rate schedule, the payment farmers get
in the advance before the final one. Have you lifted that?
Speaker 2 (03:24):
Well, we did this season, and that was on the
back of you know, those high input costs going back
a year or two and what was a pretty sort
of lackluster milk price going into last season. So we
decided this year to increase that advance rate, which gave
cash to farmers earlier. You know, we'll have a good
look at that and see should we do it again
to the season ahead, and we'll obviously talk to the
board in the right time. But it's just great to
(03:45):
have the flexibility to be able to talk about this, Jamie.
That to have a balance sheet where you can do
that is just it's just unbelievable compared to we we
were a few years ago. So it's a nice luxury
to have. We'll assess that going into the new season
ahead and with the board in the next few weeks.
Speaker 1 (03:58):
I see the ingredients business has an increased profit. That's wonderful.
Your consumer channel, this is the one that you're going
to flag off. Sales grew by eight point five percent.
Are you sure you should be selling the smiles?
Speaker 2 (04:12):
Well, I mean the headline number is it is a
good it is a good number. Revenues up, gross margins,
and those are good news stories of course when you
look at it from just those two metrics alone. But again,
it all comes back to that return on capital we've
talked previously. You know, it's about a three point four
percent of three or four billion or other capital tied
up in that consumer business, so it needs to return
(04:35):
significantly more than that to even keep pace with our
ingredients or even our food service business. And so yes
that the headline number looks like it's heading in the
right direction. But you know, we're a long long way
off where I believe we need to get to from
a respectable turn from a farmer's perspective, and therefore it
is the right time to think of other new ownership
structures out there. Hence the reason we're going hard out
(04:55):
on both trade sale and and IPO as we speak a.
Speaker 1 (04:58):
Wee bit earlier this morning, I had a look at
share price four dollars ninety four as a yield. It's
not a bad investment your Fonterra shares these days.
Speaker 2 (05:06):
Yeah, Well, the shoe price will be what the shoe
pros will be, and my farmers will determine that because
they obviously sell amongst themselves, sell them buy and sell
them themselves. But you know, our drivers have delivered the
results that you've seen today, and hopefully that gives the
confidence and momentum to farmers who to take up those shares.
But they'll make their own course, but you're pleasing to
see the momentum in that regard.
Speaker 1 (05:27):
John Key famously said, New Zealand goes where Fonterra goes.
Maybe we're getting back to those heady days.
Speaker 2 (05:33):
Well, I mean it is pleasing in New Zealand, as
we all know, economically struggling along a little bit at
the moment, and so you know, to see the New
zealandery industry and Fonterra sort of helping it and doing
its part. I mean, that's great news for us and
finally maybe your farmers will get some another recognition that
they deserve.
Speaker 1 (05:50):
Myles Harrel, thanks for your time. Congratulations to you, Peter
McBride and all the team at Fonterra. This is a
great result.
Speaker 2 (05:57):
Great thanks for mus John. We talk you soon.
Conterra reports an increase net profit and interim dividend. That
is the headline I read this morning on business desk.
To run us through the numbers, the chief executive Miles Hurrell.
Miles were all these sort of in line with market expectations.
Speaker 2 (00:15):
Yeah, good upening, Jamie. Are they're on line with probably
the expectations that we put out a week or ten
days ago when we increased our guidence. So as we
went to close out the half year the numbers that
it became obvious to us that actually we'd had a
very good half year and therefore the full year was
a little bit undercooked in terms of the guidance we
had out there. So it's the reason we came to market,
so not a jar from where we were ten days ago,
(00:38):
but from where we opened the season on the back
of a pretty low milk price last year, through a
ten dollars milk price this year, and then guidance at
fifty five seventy five. It's a pretty good result from
the team and I'm bloody proud of it.
Speaker 1 (00:50):
Well, so you should be. Let's have a look at
some of these numbers. Let's crunch the numbers. The forecast
milk price. You've just narrowed the band down there. It's
now between nine to seventy ten thirty ten dollars smiles
Hurras locked and loaded there.
Speaker 2 (01:04):
Yeah, if there's a few months ago before we close
the books completely into July. But you know, we feel
confident as we sit here today. You know, milk milk's
up across the country. Not we're seeing that it's pretty
dry at the moment, but milk milk's still up across
the country, and you know, buyers know that, and so
we just need to keep an eye on that a
little bit and make sure that it's sort of doesn't
catch us out at the last hurdle. But as we
sit here today, ten bucks ten bucks look looks a
(01:26):
pretty solid position for us.
Speaker 1 (01:27):
Yet, just on those milk volumes, is the North Island
drought not going to take its toll there?
Speaker 2 (01:33):
Well? Interesting enough, milk's still holding up, which suggests to
me there's obviously but a supplementary feed going and I
guess at ten dollars farmers will make their own calls
on that. So you know, it's certainly not coming off
at the rate we would have historically that seed will
get to a point where it just doesn't work economically,
and farmers will make the call and we'll see it.
We'll set up peel off quite quickly. But as we're
(01:53):
city today and it's holding up pretty well all things considered.
Speaker 1 (01:57):
Fonterra farmer shareholders get paid in two different ways. One
is for the milk price. The other one is the
dividend on their co op shares. Now, the interim dividend
is twenty two cents per share, up from fifteen cents
last year. But the difference is, and this is only
half your dividend, well, this is tax paid.
Speaker 2 (02:15):
You're fully impewed it to twenty two cents versus last
year's fifteen. I mean, I guess the headline number is
their fifteen last year to close on thirty or thirty
and a half cents if you'd talk of tax paid position.
So I guess that's a reflection of that our tax
losses that we had accumulated over many years are no
longer and so farmers should see that as a positive
that twenty two cents tax paid is a great position.
Speaker 1 (02:37):
Now you're going to smash the record for the best
dividend because the previous best, by my reckoning, anyhow was
fifty five cents last season. Of course that wasn't tax paid,
so you're going to beat that comfortably.
Speaker 2 (02:50):
Well, that's certainly the aim, and our team's got the
shoulders of the wheel of the next few months to
ensure we do close out the year in a positive fashion,
and we sit here today feeling good about that. You
have to pick up any of the newspapers on maintru
media to see some of the macroeconomic positions that are
out there that dur politics that are in play, and
so we need to watch that carefully. We've navigated it
very well today and see no reason why we can't
(03:13):
into the future. But you were in a different world
than we were a few years ago, that's for sure.
Speaker 1 (03:16):
What about the advance rate schedule, the payment farmers get
in the advance before the final one. Have you lifted that?
Speaker 2 (03:24):
Well, we did this season, and that was on the
back of you know, those high input costs going back
a year or two and what was a pretty sort
of lackluster milk price going into last season. So we
decided this year to increase that advance rate, which gave
cash to farmers earlier. You know, we'll have a good
look at that and see should we do it again
to the season ahead, and we'll obviously talk to the
board in the right time. But it's just great to
(03:45):
have the flexibility to be able to talk about this, Jamie.
That to have a balance sheet where you can do
that is just it's just unbelievable compared to we we
were a few years ago. So it's a nice luxury
to have. We'll assess that going into the new season
ahead and with the board in the next few weeks.
Speaker 1 (03:58):
I see the ingredients business has an increased profit. That's wonderful.
Your consumer channel, this is the one that you're going
to flag off. Sales grew by eight point five percent.
Are you sure you should be selling the smiles?
Speaker 2 (04:12):
Well, I mean the headline number is it is a
good it is a good number. Revenues up, gross margins,
and those are good news stories of course when you
look at it from just those two metrics alone. But again,
it all comes back to that return on capital we've
talked previously. You know, it's about a three point four
percent of three or four billion or other capital tied
up in that consumer business, so it needs to return
(04:35):
significantly more than that to even keep pace with our
ingredients or even our food service business. And so yes
that the headline number looks like it's heading in the
right direction. But you know, we're a long long way
off where I believe we need to get to from
a respectable turn from a farmer's perspective, and therefore it
is the right time to think of other new ownership
structures out there. Hence the reason we're going hard out
(04:55):
on both trade sale and and IPO as we speak a.
Speaker 1 (04:58):
Wee bit earlier this morning, I had a look at
share price four dollars ninety four as a yield. It's
not a bad investment your Fonterra shares these days.
Speaker 2 (05:06):
Yeah, Well, the shoe price will be what the shoe
pros will be, and my farmers will determine that because
they obviously sell amongst themselves, sell them buy and sell
them themselves. But you know, our drivers have delivered the
results that you've seen today, and hopefully that gives the
confidence and momentum to farmers who to take up those shares.
But they'll make their own course, but you're pleasing to
see the momentum in that regard.
Speaker 1 (05:27):
John Key famously said, New Zealand goes where Fonterra goes.
Maybe we're getting back to those heady days.
Speaker 2 (05:33):
Well, I mean it is pleasing in New Zealand, as
we all know, economically struggling along a little bit at
the moment, and so you know, to see the New
zealandery industry and Fonterra sort of helping it and doing
its part. I mean, that's great news for us and
finally maybe your farmers will get some another recognition that
they deserve.
Speaker 1 (05:50):
Myles Harrel, thanks for your time. Congratulations to you, Peter
McBride and all the team at Fonterra. This is a
great result.
Speaker 2 (05:57):
Great thanks for mus John. We talk you soon.
Popular Podcasts
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
40s and Free Agents: NFL Draft Season
Daniel Jeremiah of Move the Sticks and Gregg Rosenthal of NFL Daily join forces to break down every team's needs this offseason.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.