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7 Mid Canterbury tales celebrate Feds Vol 21 No 37, September 25, 2023
Fonterra smashes targets Hugh Stringleman
NEWS
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Fonterra
ONTERRA’S 2023 financial results smashed its own key metrics in its Strategy 2030, giving rise to new targets for the consolidation of gains already made. The results were embarrassingly good, well in advance of the end of the decade. They were largely shaped by non-reference products, cheese and casein, attracting huge premiums over reference products, milk powders and fats. Not only are Fonterra’s targets blown, but the milk price framework of reference products is now questionable. Reported profit after tax of $1.6 billion was up 170% from FY22 and massively exceeded the 2030 goal of $800-$900 million. The return on capital – with a goal of 9-10% – came in at 12.4%, nearly double that of the year before. The August capital return of 50c a share was matched by a dividend of 50c, bringing total payout to $9.22/kg milkfat, the second highest in Fonterra’s history. Reported earnings were 95c a
share, compared with 36c in FY22, so the dividend payout was 52% and the co-operative retained 45c or $750m. Debt has been hammered, down $2bn to $3.2bn and the 2030 gearing ratio target of plus-30% is already below 30%. Inventory valuations and working capital movements have played a big part in debt reduction, along with a net $200m from the sale of Soprole in Chile. To help maintain this momentum, chief executive Miles Hurrell has published two new strategic goals – inflation-adjusted cash operating expenses reduction of 4% annually and gross profit increase from core operations of 2% annually. Those operational savings will help Hurrell meet other Strategy 2030 goals in capital expenditure and investments in sustainability and higher-value products. Rather modestly, he said: “We released our long-term strategy in September 2021 and since then have made good progress towards our 2030 goals. “Our FY23 performance demonstrates that we are focusing on the right strategic priorities. “This said, we are aware that Continued page 3
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Bonding through all things ag Friends Eliot Webby and Aliya Fever have stepped through their school agriculture studies side by side for years via Trades Academy and are now completing their New Zealand Certificate in Primary Industry Operational Skills (Level 3) and plan on continuing their learning with New Zealand Certificate in Agriculture Farming Systems (Level 3) next month.
Bremworth offers 10-year contracts A plea from farmers for some certainty around strong wool production has prompted carpetmaker Bremworth to offer some growers supply contracts.
NEWS 5 Undetected drench resistance is costing NZ’s sheep industry close to $100 million a year.
South Island’s large rural electorates expected to be dominated by National in October poll.
Ben Anderson wants less farming nostalgia and a lot more fresh thinking from the next PM.
NEWS 6
POLITICS 8-9
OPINION 19
WE BACK RURAL COMMUNITIES HERE, THERE AND EVERYWHERE. LIKE RIGHT HERE, WITH THE FLEMINGTON MUD RUN. We believe in investing back into the communities we grew up in. Which is why you’ll find FMG supporting rural people and organisations all over New Zealand. Like at the Little River Pumpkin Festival on the Banks Peninsula, at the Flemington Mud Run in the Central Hawkes Bay, or at the FMG Young Farmer of the Year contest. It’s all about getting in behind rural New Zealand to keep moving ahead. We’re here for the good of the country.
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