March 26, 2025 • 6 mins
Fonterra’s elaborating on the details of their consumer brand sell-off.
The conundrum comes off the back of a monster half year result in which operating profit rose to 16%.
The planned divestment could see brands like Anchor and Mainland sold off.
CEO Miles Hurrell told Mike Hosking the key for any good business is knowing what you’re good at.
He says that over the years, the returns as an ingredients business have been stellar, but farmers aren’t getting the desired return on capital from the consumer side of things.
He says they believe they can get higher returns from investing that cash back into ingredients and food service.
LISTEN ABOVE
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):
Fontierra. So they're on the road this week to talk
to the stakeholders about the sale of its consumer brands.
It's either a trade sailor an IPO. If it sells,
it involves names like Anchor and Mainland. Of course, as
I mentioned earlier, comes off the back of the golden
days and these big payouts for farmers. The Fontier boss,
Myles hurls back with us, good morning.
Speaker 2 (00:16):
Good morning.
Speaker 1 (00:17):
You make on very broad issues. You must be congratulated.
Does it feel at the moment as good as it looks?
Speaker 2 (00:24):
Yeah? It does.
Speaker 3 (00:24):
I mean we're out on farm this week, right across
the country, both senior management and the board and out
talking to farmers, and you know that they recognize where
we've come from. And to be standing out there talking
about their results for the six months. It does feel good,
so good to be acknowledged in that way for a
cross our team.
Speaker 1 (00:38):
And with the forecast two seasons, two good seasons coming
and that's unusual. Is there anything weird out there that's
happening or is this these just golden days?
Speaker 3 (00:48):
Well, well, certainly nothing that hasn't been communicated already. I mean,
you see that some of the geopolitics at play and
what's going on in Ukraine and Ghasa or An everywhere
else around the world, and so these things are worrias
are on the back of our minds. A city, today's
supply demand is in pretty good shape, and so we
take that in terms of the forecast we have for
the season ahead.
Speaker 2 (01:04):
But we also need to be mindful and our.
Speaker 3 (01:06):
Farmers have been through this business a number of years
and we'll be watching it closely at the same time
we do.
Speaker 1 (01:11):
Right, So to the consumer side of the equation, how
exercised and energized? Is this discussion among you a lot?
Speaker 3 (01:18):
Yes, there's a lot of clarification questions that are coming
from the floor, as you'd expect. I mean, it is
a big decision that ultimately our farmers will make. So yeah,
a lot, a lot of conversation, but it's really around
the why. Let to understand the why and what does
the cop look like into the future. So that's where
the vast already questions are coming from. And it's been
a good conversation.
Speaker 1 (01:34):
Are you having to change minds?
Speaker 2 (01:37):
No, not generally.
Speaker 3 (01:38):
I think people are walking in with just that that
those questions around you know where we're going as a corporative.
Speaker 2 (01:43):
We know we've come from.
Speaker 3 (01:44):
It's pretty clear we're in a pretty good space as
we stand here, but what does the future look like?
So a lot of conversations around that, but but not
not not not changing minds per SAE, but just as clarification.
Speaker 1 (01:55):
Why don't you see a future with the consumer side
of the equation.
Speaker 3 (02:00):
We're like any good business and it starts with a
good strategy, know and where you are good at. And
the returns for many years act you an ingredients business
have been stellar right across the board. We have some
ups and downs on the way that buying large returns
are very good. Food service of the past of the five, six,
seven years have done very very well, and we continue
to see growth in that in that business. When you
look at the consumer business and I heard you're opening
(02:21):
this morning, one hundred and seventy three million at a
headline level looks okay. But what people lose sight of
it's three point four billion dollars of our farmer's capital
tied up in that business. And so that the effectively
roads value day by day because it's not getting the
return on capital that our farmers have ultimately are seeking.
So we can invest that business that cash back into
construt into ingredients, back into food service, where we believe
(02:44):
you get higher returns.
Speaker 1 (02:45):
Given that you're a good company, why can't you do
what you would assume somebody else would do if they
bought it off you.
Speaker 3 (02:52):
Yeah, and look, you go to the supermarket here in
New Zone and we have a very good presence. You
look at the chillis space here and even on the
dry shelf, we have a very good presence. But it's
sort of misunderstood that you get the international market, we
don't have that sort of presence. You know, we have
very strong category control in certain areas, but they're quite
narrow categories. So if we wanted to really go in
(03:12):
as scale and actually look at sort of spreading costs
across a wider business, you probably need to go beyond Deary.
Speaker 2 (03:18):
You probably need to go alot beyond New Zealand Airy.
Speaker 3 (03:21):
You probably need to start thinking about confectionery and maybe
chocolate and potentially back into ice cream to start to
become a real consumer goods company in those markets. And
we truly believe that's not part of our expertise. We've
been there before. We tried to get into some businesses
were outside of our expertise in international markets and it
took a number of years to try and turn that around. So,
you know, focusing on what you're good at, looking at
(03:42):
the cash can you recycle and the things you're good at,
and we truly believe in those ingredients and food service,
which is you know, by far better returning businesses over
the long term. That for us is about value add
and so that's where we're.
Speaker 1 (03:53):
Going to go and not just potentially a sale, but
how you sell IPO or trade? Is that angsty as well.
Speaker 2 (03:58):
Or not angsty?
Speaker 3 (04:00):
But again, you know they're wanting, they want in clarity
now which way we're going. But you know from ours
we need to try both those channels and see where
the best returns come from. So yeah, we're going hard
on that and we'd expect an update the next few
months out to our shoeholders. But you're going hard on
both those venues. Both are very expensive to operate, but
at the same time we think it's the right thing
to do.
Speaker 1 (04:19):
Is there any value you're placing as a company. And
the I p O side of the equation about patriotism
New Zealanders participating any of that or you're just looking
for the dollar.
Speaker 2 (04:29):
No, certainly it does come into play.
Speaker 3 (04:31):
But at the same time, and it has been a
question from the floor around you know, social license and
all that sort of sort of thing. But you know
it's no secret and again you mentioned it in you're opening.
You know, the team have done a pretty good job
in getting New Zealand to to where we are economically.
We've done our fearsue of lifting as farms, and so
when it comes to you know, do we have a
social license? I mean, it's not the questions I get
(04:52):
in the weekends. Most of they go through the price
of butter and things that are outside of our control.
Speaker 2 (04:57):
So you know, I'd challenge it a bit. Far.
Speaker 3 (05:00):
Haven't really had the recognition for what they do here
in New Zealand.
Speaker 2 (05:03):
It's really really is.
Speaker 1 (05:04):
There an education? But just on the butter got me going,
Can you honestly tell me that most people don't understand
why they're paying too much for butter as much as
they hate paying too much. I mean, there's a reason
for it, and a good one, yeah.
Speaker 2 (05:16):
There is.
Speaker 3 (05:16):
And we're dictated pretty much by the international market and
then the retailers of news and the will set their
own prices and now clearly there's a bit in there
for us in terms of efficiency and manufacturing costs and
margins and those things.
Speaker 2 (05:26):
But you know it is misunderstood clearly.
Speaker 3 (05:29):
But you know, at the same time it's very hard
to explain then in a twenty second crossover. So you know,
we try our best, but it's a non easy conversation.
Speaker 2 (05:37):
It's for sure.
Speaker 1 (05:38):
When are we going to know whether you flick it
and how you flick it?
Speaker 3 (05:41):
Yeah, So the market guidance we've got out there at
the moment, which we said in May last year we'd
be twelve to eighteen month program and so you know
we're still sticking to that and so but the team
are running hard.
Speaker 2 (05:49):
We've just had the.
Speaker 3 (05:51):
Non deal road shows throughout as Asia, Paciffolk that they've
just concluded, and then we're expecting some non binding offers
to come through on the trade sale side of are
the next month or so, so you know, sitting with
the next few months, we'll be in have some clarity
and then the real week.
Speaker 1 (06:06):
Thanks all right, appreciate you time. Merrels Miles Hurrale Fontira
CEO and just quickly the fit Farmers a note yesterday
that they're on board with the government a REMA reform
announced this week. Chris Bishop with us by the way,
later on in the program, difficult to get things done.
The red tape and box sticking has become totally ridiculous.
Reforms are on the right track, and so say all
of us. For more from The Mic Asking Breakfast, listen
(06:26):
live to news talks.
Speaker 3 (06:28):
It'd be from six am weekdays, or follow the podcast
on iHeartRadio.
Fontierra. So they're on the road this week to talk
to the stakeholders about the sale of its consumer brands.
It's either a trade sailor an IPO. If it sells,
it involves names like Anchor and Mainland. Of course, as
I mentioned earlier, comes off the back of the golden
days and these big payouts for farmers. The Fontier boss,
Myles hurls back with us, good morning.
Speaker 2 (00:16):
Good morning.
Speaker 1 (00:17):
You make on very broad issues. You must be congratulated.
Does it feel at the moment as good as it looks?
Speaker 2 (00:24):
Yeah? It does.
Speaker 3 (00:24):
I mean we're out on farm this week, right across
the country, both senior management and the board and out
talking to farmers, and you know that they recognize where
we've come from. And to be standing out there talking
about their results for the six months. It does feel good,
so good to be acknowledged in that way for a
cross our team.
Speaker 1 (00:38):
And with the forecast two seasons, two good seasons coming
and that's unusual. Is there anything weird out there that's
happening or is this these just golden days?
Speaker 3 (00:48):
Well, well, certainly nothing that hasn't been communicated already. I mean,
you see that some of the geopolitics at play and
what's going on in Ukraine and Ghasa or An everywhere
else around the world, and so these things are worrias
are on the back of our minds. A city, today's
supply demand is in pretty good shape, and so we
take that in terms of the forecast we have for
the season ahead.
Speaker 2 (01:04):
But we also need to be mindful and our.
Speaker 3 (01:06):
Farmers have been through this business a number of years
and we'll be watching it closely at the same time
we do.
Speaker 1 (01:11):
Right, So to the consumer side of the equation, how
exercised and energized? Is this discussion among you a lot?
Speaker 3 (01:18):
Yes, there's a lot of clarification questions that are coming
from the floor, as you'd expect. I mean, it is
a big decision that ultimately our farmers will make. So yeah,
a lot, a lot of conversation, but it's really around
the why. Let to understand the why and what does
the cop look like into the future. So that's where
the vast already questions are coming from. And it's been
a good conversation.
Speaker 1 (01:34):
Are you having to change minds?
Speaker 2 (01:37):
No, not generally.
Speaker 3 (01:38):
I think people are walking in with just that that
those questions around you know where we're going as a corporative.
Speaker 2 (01:43):
We know we've come from.
Speaker 3 (01:44):
It's pretty clear we're in a pretty good space as
we stand here, but what does the future look like?
So a lot of conversations around that, but but not
not not not changing minds per SAE, but just as clarification.
Speaker 1 (01:55):
Why don't you see a future with the consumer side
of the equation.
Speaker 3 (02:00):
We're like any good business and it starts with a
good strategy, know and where you are good at. And
the returns for many years act you an ingredients business
have been stellar right across the board. We have some
ups and downs on the way that buying large returns
are very good. Food service of the past of the five, six,
seven years have done very very well, and we continue
to see growth in that in that business. When you
look at the consumer business and I heard you're opening
(02:21):
this morning, one hundred and seventy three million at a
headline level looks okay. But what people lose sight of
it's three point four billion dollars of our farmer's capital
tied up in that business. And so that the effectively
roads value day by day because it's not getting the
return on capital that our farmers have ultimately are seeking.
So we can invest that business that cash back into
construt into ingredients, back into food service, where we believe
(02:44):
you get higher returns.
Speaker 1 (02:45):
Given that you're a good company, why can't you do
what you would assume somebody else would do if they
bought it off you.
Speaker 3 (02:52):
Yeah, and look, you go to the supermarket here in
New Zone and we have a very good presence. You
look at the chillis space here and even on the
dry shelf, we have a very good presence. But it's
sort of misunderstood that you get the international market, we
don't have that sort of presence. You know, we have
very strong category control in certain areas, but they're quite
narrow categories. So if we wanted to really go in
(03:12):
as scale and actually look at sort of spreading costs
across a wider business, you probably need to go beyond Deary.
Speaker 2 (03:18):
You probably need to go alot beyond New Zealand Airy.
Speaker 3 (03:21):
You probably need to start thinking about confectionery and maybe
chocolate and potentially back into ice cream to start to
become a real consumer goods company in those markets. And
we truly believe that's not part of our expertise. We've
been there before. We tried to get into some businesses
were outside of our expertise in international markets and it
took a number of years to try and turn that around. So,
you know, focusing on what you're good at, looking at
(03:42):
the cash can you recycle and the things you're good at,
and we truly believe in those ingredients and food service,
which is you know, by far better returning businesses over
the long term. That for us is about value add
and so that's where we're.
Speaker 1 (03:53):
Going to go and not just potentially a sale, but
how you sell IPO or trade? Is that angsty as well.
Speaker 2 (03:58):
Or not angsty?
Speaker 3 (04:00):
But again, you know they're wanting, they want in clarity
now which way we're going. But you know from ours
we need to try both those channels and see where
the best returns come from. So yeah, we're going hard
on that and we'd expect an update the next few
months out to our shoeholders. But you're going hard on
both those venues. Both are very expensive to operate, but
at the same time we think it's the right thing
to do.
Speaker 1 (04:19):
Is there any value you're placing as a company. And
the I p O side of the equation about patriotism
New Zealanders participating any of that or you're just looking
for the dollar.
Speaker 2 (04:29):
No, certainly it does come into play.
Speaker 3 (04:31):
But at the same time, and it has been a
question from the floor around you know, social license and
all that sort of sort of thing. But you know
it's no secret and again you mentioned it in you're opening.
You know, the team have done a pretty good job
in getting New Zealand to to where we are economically.
We've done our fearsue of lifting as farms, and so
when it comes to you know, do we have a
social license? I mean, it's not the questions I get
(04:52):
in the weekends. Most of they go through the price
of butter and things that are outside of our control.
Speaker 2 (04:57):
So you know, I'd challenge it a bit. Far.
Speaker 3 (05:00):
Haven't really had the recognition for what they do here
in New Zealand.
Speaker 2 (05:03):
It's really really is.
Speaker 1 (05:04):
There an education? But just on the butter got me going,
Can you honestly tell me that most people don't understand
why they're paying too much for butter as much as
they hate paying too much. I mean, there's a reason
for it, and a good one, yeah.
Speaker 2 (05:16):
There is.
Speaker 3 (05:16):
And we're dictated pretty much by the international market and
then the retailers of news and the will set their
own prices and now clearly there's a bit in there
for us in terms of efficiency and manufacturing costs and
margins and those things.
Speaker 2 (05:26):
But you know it is misunderstood clearly.
Speaker 3 (05:29):
But you know, at the same time it's very hard
to explain then in a twenty second crossover. So you know,
we try our best, but it's a non easy conversation.
Speaker 2 (05:37):
It's for sure.
Speaker 1 (05:38):
When are we going to know whether you flick it
and how you flick it?
Speaker 3 (05:41):
Yeah, So the market guidance we've got out there at
the moment, which we said in May last year we'd
be twelve to eighteen month program and so you know
we're still sticking to that and so but the team
are running hard.
Speaker 2 (05:49):
We've just had the.
Speaker 3 (05:51):
Non deal road shows throughout as Asia, Paciffolk that they've
just concluded, and then we're expecting some non binding offers
to come through on the trade sale side of are
the next month or so, so you know, sitting with
the next few months, we'll be in have some clarity
and then the real week.
Speaker 1 (06:06):
Thanks all right, appreciate you time. Merrels Miles Hurrale Fontira
CEO and just quickly the fit Farmers a note yesterday
that they're on board with the government a REMA reform
announced this week. Chris Bishop with us by the way,
later on in the program, difficult to get things done.
The red tape and box sticking has become totally ridiculous.
Reforms are on the right track, and so say all
of us. For more from The Mic Asking Breakfast, listen
(06:26):
live to news talks.
Speaker 3 (06:28):
It'd be from six am weekdays, or follow the podcast
on iHeartRadio.
Popular Podcasts
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.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Bobby Bones Show
Listen to 'The Bobby Bones Show' by downloading the daily full replay.