ONEONEYEARYEAR.2012 ANNUAL RESULTS
© FONTERRA CO-OPERATIVE GROUP LTD 1© FONTERRA CO-OPERATIVE GROUP LTD
SIR HENRY VAN DER HEYDENCHAIRMAN
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OVERVIEW
• Highlights
• Business performance
• Update on strategy• Update on strategy
• Questions and answers
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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.
© FONTERRA CO-OPERATIVE GROUP LTD 4
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
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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
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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
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THEO SPIERINGSCHIEF EXECUTIVE
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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 ($23) million in FY2011.
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FY2012 – NZ MILK PRODUCTS
• Strong normalised EBIT growth up 23%Normalised EBIT ($m)(1)
420
515• Sales volume up 7% to 2.8 million MT
• 7% increase in contribution margin to $385 per MTVolume
G h(2)
Normalised
Growth(2)
6.6%
Normalised EBIT
Growth
22.6%
FY2011 FY2012Notes:(1) FY2011 has been restated to reflect the movement of Quick Service Restaurants (QSR) into NZ Milk
Products from ANZ and China Foodservice sales out of NZ Milk Products into Asia/AME These both occurredProducts from ANZ and China Foodservice sales out of NZ Milk Products into Asia/AME. These both occurred in FY2012. The comparative figures in the segment note of the FY2012 Financial Statements has been restated to reflect this.
(2) Calculated using total (external plus intersegment) sales volumes.
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MAJOR FACTORS DRIVING NZ MILK PRODUCTS EBITPRODUCTS EBIT
• Shorter-term fixed price t t t
Price above GDTcustomer contracts
• Prices above GDT
• Adding value for key customers
Indicator – WMP/WMP GDT
• Favourable impact from product mix
Source: Fonterra estimates
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FY2012 – ANZ
• Lower result reflects challenging trading diti
Normalised EBIT ($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 $5 million in FY2011, relates to business activities in Western Australia that were divested in FY2011.(3) Calculated using total (external plus intersegment) sales volume.
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FY2012 – ASIA, AFRICA AND MIDDLE EAST
• Strong demand Normalised EBIT ($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.
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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.
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JONATHAN MASONCHIEF FINANCIAL OFFICER
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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.
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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
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THEO SPIERINGS
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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
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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
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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
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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
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