2012 annual results presentation 26 september 2012€¦ · 26-09-2012 · microsoft powerpoint -...

ONEONEYEARYEAR.2012 ANNUAL RESULTS

© FONTERRA CO-OPERATIVE GROUP LTD 1© FONTERRA CO-OPERATIVE GROUP LTD

SIR HENRY VAN DER HEYDENCHAIRMAN

© FONTERRA CO-OPERATIVE GROUP LTD 2© FONTERRA CO-OPERATIVE GROUP LTD 2

OVERVIEW

• Highlights

• Business performance

• Update on strategy• Update on strategy

• Questions and answers

© FONTERRA CO-OPERATIVE GROUP LTD 3

PAYOUT

0 307.90

0.27

0.30

0.326.37 6.40

6.107.60

6.08

Dividend

Farmgate Milk PriceRetentions(3)

(2)

(1)

Retentions(3)

N t

2010 2011 20120.23 0.25 0.10

Notes:(1) Cents per share (2) $ per kgMS.(3) Retentions are calculated as net profit after tax attributable to Co-operative Shareholders divided by number of shares at 31 May, less dividend per share.


GDT PRICE MOVEMENTS

1 600GDTTM Trade Weighted Index

1,200

1,400

1,600

= 10

00)

800

1,000

1,200

Mar

ch 2

010

400

600

ce In

dex

(M

0

200Pric


RECORD MILK COLLECTIONS

90Fonterra’s New Zealand season milk volume

70

80

90

/day

)

2009/102010/112011/12

40

50

60

llion

litr

es/

20

30

40

Volu

me

(mil

0

10

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

V

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunSource: Fonterra Note: Volumes represent a six day moving average of daily production


TRADING AMONG FARMERS

LATE OCTOBER/EARLY NOVEMBER

LATE OCTOBER/LATE NOVEMBER END NOVEMBER

• Fonterra Offer Documents and Annual Report a ailable

• Demand and Supply Offer period

• Fonterra Shareholders’ Market and Fonterraavailable Fonterra Shareholders’ Fund begin operating


THEO SPIERINGSCHIEF EXECUTIVE


FY2012 HIGHLIGHTS

• Normalised EBIT of $1,028 million, reflecting:NZD million FY2011 FY2012 Change

– Higher price achievement above GDT– ANZ impacted by challenging trading

conditions

NZD million FY2011 FY2012 Change

Total Sales Volume (000 MT) 3,866 3,941 1.9%

Revenue 19,871 19,769 (0.5%)

– Strong NZD negatively impacted Asia and Middle East and Latam earnings

• Improved operating cash flow of $1.4 billion up

Normalised EBITDA(1) 1,494 1,520 1.7%

Normalised EBIT(1) 1,005 1,028 2.3%

Profit Before Tax 622 677 8.8%17.4%

• Group sales volume growth of 2% to 3.9 million MT – was broad based

Profit for the period 771 624 (19.1%)

Operating cash flow 1,184 1,390 17.4%

Earnings stability through a period of market volatility

Note:(1) Normalised EBITDA and normalised EBIT excludes non-recurring items of $41 million in FY2012 and ($23) million in FY2011.


FY2012 – NZ MILK PRODUCTS

• Strong normalised EBIT growth up 23%Normalised EBIT ($m)(1)

420

515• Sales volume up 7% to 2.8 million MT

• 7% increase in contribution margin to $385 per MTVolume

G h(2)

Normalised

Growth(2)

6.6%

Normalised EBIT

Growth

22.6%

FY2011 FY2012Notes:(1) FY2011 has been restated to reflect the movement of Quick Service Restaurants (QSR) into NZ Milk

Products from ANZ and China Foodservice sales out of NZ Milk Products into Asia/AME These both occurredProducts from ANZ and China Foodservice sales out of NZ Milk Products into Asia/AME. These both occurred in FY2012. The comparative figures in the segment note of the FY2012 Financial Statements has been restated to reflect this.

(2) Calculated using total (external plus intersegment) sales volumes.


MAJOR FACTORS DRIVING NZ MILK PRODUCTS EBITPRODUCTS EBIT

• Shorter-term fixed price t t t

Price above GDTcustomer contracts

• Prices above GDT

• Adding value for key customers

Indicator – WMP/WMP GDT

• Favourable impact from product mix

Source: Fonterra estimates


FY2012 – ANZ

• Lower result reflects challenging trading diti

Normalised EBIT ($m)(1,2)

256

204

conditions

• Higher trade and promotional spend to maintain market shareVolume

G h(3)204• Good performance from foodservice

• Stable performance in New Zealand and in ingredients

Normalised

Growth(3)

-12.5%

• Plan in place – focus on efficiencyNormalised

EBIT Growth

-20.3%

FY2011 FY2012Notes:(1) FY2011 has been restated to reflect the movement of Quick Service Restaurants (QSR) into NZ Milk Products

from ANZ This occurred in FY2012 The comparative figures in the segment note in the FY2012 Financialfrom ANZ. This occurred in FY2012. The comparative figures in the segment note in the FY2012 Financial Statements has been restated to reflect this.

(2) EBIT of $5 million in FY2011, relates to business activities in Western Australia that were divested in FY2011.(3) Calculated using total (external plus intersegment) sales volume.


FY2012 – ASIA, AFRICA AND MIDDLE EAST

• Strong demand Normalised EBIT ($m)(1)

• Currency impact on normalised EBIT

• EBIT growth of 8% (constant currency)

• Anlene and Anmum performed well inVolume

G h(2)193 194

• Anlene and Anmum performed well in Vietnam, Hong Kong, Philippines and Malaysia

• Strong volume growth by Anlene and AnmumNormalised

Growth(2)

3.1%

Strong volume growth by Anlene and Anmum in China

• Strong performance in Sri Lanka across all categories

NormalisedEBIT

Growth

0.5% categories

Notes:(1) FY2011 has been restated to reflect the movement of China Foodservice sales into Asia Africa and Middle

FY2011 FY2012

(1) FY2011 has been restated to reflect the movement of China Foodservice sales into Asia, Africa and Middle East from NZ Milk Products. This occurred in FY2012. The comparative figures in the segment note in the FY2012 Financial Statements has been restated to reflect this.

(2) Calculated using total (external plus intersegment) sales volumes.


FY2012 – LATAM

• Soprole normalised EBIT up 6% to $83 millionNormalised EBIT ($m)(1)

• Latam normalised EBIT growth of 16% (constant currency)

• Product innovationVolume G h(2)

129

• DPA related income of $46 million up 12%(1)

Normalised

Growth(2)

2.2%

119Normalised

EBIT Growth

8.4%

FY2011 FY2012

Notes:(1) FY2012 has been normalised for an impairment of $8 million in the value of Venezuela.(2) Calculated using total (external plus intersegment) sales volumes.


JONATHAN MASONCHIEF FINANCIAL OFFICER


STRONG BALANCE SHEET POSITION

43%Economic Gearing (D/D+E)(1)

41.8%42%

42%

43%

40%

41%

41%

39.1%

39%

39%

40%

38%

38%

FY2011 FY2012FY2011 FY2012Note:(1) Gearing is measured as economic net interest bearing debt over economic net interest bearing debt plus equity (reflecting debt hedging in place at balance date). Equity excludes the cashflow hedge reserve.


CAPITAL EXPENDITURE

$m FY2010 FY2011 FY2012Actual Actual Actual

NZ Milk Products 378 470 645NZ Milk Products 378 470 645

Australia and New Zealand 74 135 181

Asia, Africa and Middle East 13 17 19

Latam 27 22 43

Total capital expenditure 492 644 888


THEO SPIERINGS


STRATEGY REFRESH UPDATE

Our Vision and Story

What we stand for

Cash Generators

‘Must do’

Growth Generators

‘Can do’

New Business

‘Want to do’

New Zealand Milk

Middle-East & North Africa (MENA)

China

ASEAN

Latin America (LATAM)

India

Advanced Nutrition

O ti i

What we go for

ANZ

Everyday nutrition

US/Europe

( )

Out-of-Home NutritionOptimise

Right size

Organisational Capabilities Capital Structure

US/Europe Right size


PROGRESS ON STRATEGY REFRESH

• NZDL

Strategic Paths Highlights

Optimise NZ milk1 • NZDL• First milk through Darfield

Build and grow beyond our t t iti2 • Announced packing and blending plant in IndonesiaEVERYDAY

current customer positions2 Announced packing and blending plant in Indonesia

Deliver on foodservice potential3 • Shanghai Innovation CentreOUT-OF-HOME

Grow our position in mobility • Agreement with A-Ware in Holland on whey

ADVANCED4

Selectively

Develop selectedleading position in

paeds and maternal• Extending position in infant nutrition5

Selectivelyinvest in milk pools

Alignment of business and organisation

• China Farm Hub

• Realigned our business to deliver strategy

ENABLERS6

7


organisation g gy

SUMMARY

Payout• $6.40 – 19% downVolume• Milk volumes up 11%• Milk volumes up 11%• Sales volumes up 2%Value• Normalised EBIT up 2%• NZMP normalised EBIT up 23%

ANZ li d EBIT d 20%• ANZ normalised EBIT down 20%• Focus on sales mix / costsVelocityy• New structure in place• Strategy deployment underway – around 90 projects


GLOBAL SITUATION

• August: Farmgate Milk Price of $5.25 per kilogram of milksolids

• Recent price improvement on GDT eroded by high NZD

• TAF blackout

• No earnings updates prior to Prospectus being lodged
