Latest / Best of Business / Richard Allen: Fonterra CEO on the company delivering a full-year profit of $2.6 billion

Transcript

Richard Allen: Fonterra CEO on the company delivering a full-year profit of $2.6 billion · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Right now on the subject of that Fonterra result, the
• 0:20
  Speaker 2: dairy co-op has posted an underlying profit of $ 1. 8 billion
• 0:23
  Speaker 2: for the 2026 financial year. That's up 23% on last year.
• 0:28
  Speaker 2: That number does not include the $ 1. 2 billion divestment benefit
• 0:31
  Speaker 2: from selling its consumer businesses. Richard Allen is Fonterra's new
• 0:35
  Speaker 2: CEO and he's with us. Hello, Richard.
• 0:37
  Speaker 3: Good evening, Heather.
• 0:38
  Speaker 2: How are you feeling about your first set of results?
• 0:41
  Speaker 4: Yeah, no, it's a good day for the cooperative and
• 0:43
  Speaker 4: hopefully a good day for New Zealand. You know, $ 20
• 0:45
  Speaker 4: billion flowing into the New Zealand economy and, yeah, hard
• 0:48
  Speaker 4: work for our farmers and they've got their dessert today.
• 0:51
  Speaker 2: Yeah, so you guys, I mean, what's remarkable about it
• 0:54
  Speaker 2: is that you guys set a goal of achieving this
• 0:56
  Speaker 2: result within three years by 2028 and you've achieved it
• 0:59
  Speaker 2: this year.
• 1:00
  Speaker 3: How?
• 1:00
  Speaker 1: How?
• 1:02
  Speaker 4: Yeah, it's a great result. You know, we've been very
• 1:05
  Speaker 4: clear on, I guess, you know, our strategy, you know,
• 1:07
  Speaker 4: focused B2B since the divestment. And our B2B businesses have
• 1:11
  Speaker 4: had a great year. You know, the teams right across
• 1:14
  Speaker 4: the business from, you know, our manufacturing teams through to
• 1:16
  Speaker 4: market have been super clear on the job to be
• 1:19
  Speaker 4: done and some awesome work from our teams across the
• 1:21
  Speaker 4: market and working with our customers. So just good discipline
• 1:25
  Speaker 4: and good execution from the teams.
• 1:27
  Speaker 3: And yeah, a couple of tailwinds, but no, all in all,
• 1:29
  Speaker 3: a good result.
• 1:30
  Speaker 2: Bit of chat about protein today.
• 1:33
  Speaker 3: Yeah, a bit of chat about protein.
• 1:35
  Speaker 4: You know, great to be out today talking about a
• 1:38
  Speaker 4: billion dollars of incremental investment into New Zealand. We've seen
• 1:42
  Speaker 4: the opportunity in protein now for a few years and
• 1:44
  Speaker 4: that's not going away. So alongside that, we're also investing
• 1:47
  Speaker 4: in our sustainability, water and emissions through our South Island network.
• 1:51
  Speaker 4: So yeah, that's more jobs for the South Island and
• 1:55
  Speaker 4: a good result for New Zealand.
• 1:55
  Speaker 2: So what is this billion dollars that you're pumping into
• 1:57
  Speaker 2: the South Island going to do for protein? What are
• 2:00
  Speaker 2: you up to there?
• 2:01
  Speaker 4: Yeah, so we previously announced that we were forming a
• 2:04
  Speaker 4: protein hub in our stud home site.
• 2:06
  Speaker 3: So that's down in the South Island. That's gone really well.
• 2:09
  Speaker 4: And so effectively, this not only accelerates that expansion, but
• 2:14
  Speaker 4: also brings more capacity online. With that, though, we need
• 2:18
  Speaker 4: to also kind of accelerate our wastewater treatment and our
• 2:21
  Speaker 4: emissions treatment. All in all, this is about really taking
• 2:25
  Speaker 4: the opportunity we see with milk growing in the South
• 2:27
  Speaker 4: Island and our customers around the world wanting us to grow.
• 2:30
  Speaker 4: And when you bring the two together, put a bit
• 2:32
  Speaker 4: of investment behind it, it's a good story.
• 2:35
  Speaker 2: Now, what is it that you think? If you're on
• 2:39
  Speaker 2: the Wigovies and you need to consume high amounts of
• 2:42
  Speaker 2: protein and make sure it's really good protein, why wouldn't
• 2:44
  Speaker 2: you just go and eat some chicken or eat a
• 2:46
  Speaker 2: steak or drink a glass of milk? What is it
• 2:49
  Speaker 2: that you guys could provide as a product that's alternative
• 2:51
  Speaker 2: to that?
• 2:53
  Speaker 3: That's a great question.
• 2:54
  Speaker 4: And I think it's something that we've been working on
• 2:57
  Speaker 4: for a long time in terms of not all proteins equal,
• 3:00
  Speaker 4: as you say. So the functional benefits of different types
• 3:03
  Speaker 4: of protein do vary and the absorption rates in the
• 3:05
  Speaker 4: body vary. And then you've got to make the stuff
• 3:07
  Speaker 4: taste good, right? Because for a long time, you know,
• 3:10
  Speaker 4: high-protein products didn't taste that great. And so, you know,
• 3:13
  Speaker 4: for years we've been working on, well, how do you
• 3:15
  Speaker 4: increase the protein content of your ready-to-drinks or of your powders,
• 3:20
  Speaker 4: but also make the consumer enjoy the experience?
• 3:22
  Speaker 3: And that's where kind of our.
• 3:24
  Speaker 4: Innovation, our IP really shines through, is that ability to
• 3:28
  Speaker 4: put more dairy protein into products. Functionally, that's great for
• 3:31
  Speaker 4: the body, but at the same time, we're able to
• 3:33
  Speaker 4: make those products taste really good. Yeah.
• 3:35
  Speaker 2: Now, are you preparing yourself for a bit of blowback
• 3:38
  Speaker 2: on Miles' pay?
• 3:40
  Speaker 4: Look, from our perspective, you know, that's a question for
• 3:43
  Speaker 4: the board, but, you know, from the team's perspective, he
• 3:45
  Speaker 4: earned that.
• 3:46
  Speaker 2: Oh, he earned it. Well said, Richard. It was so
• 3:49
  Speaker 2: well said and so abrupt, I was expecting you to
• 3:52
  Speaker 2: go on about it. I think you put it quite nicely. Now,
• 3:55
  Speaker 2: I've got to ask you about this election because this
• 3:56
  Speaker 2: is a particularly fraught one. Which policy freaks you out
• 3:59
  Speaker 2: the most?
• 4:01
  Speaker 3: Look, we won't comment on policies.
• 4:03
  Speaker 4: I think what we're about is, obviously, we're real proud
• 4:06
  Speaker 4: of our cooperative. We belong and we believe in strong
• 4:09
  Speaker 4: cooperatives and the benefit that they deliver to New Zealand. Hopefully,
• 4:14
  Speaker 4: today's results are a bit of a signal as to
• 4:17
  Speaker 4: when we have strong co-ops, they deliver for not only
• 4:21
  Speaker 4: their members, but also for the wider New Zealand, allows
• 4:23
  Speaker 4: us to go out and do the investments that we've
• 4:25
  Speaker 4: announced today. So, We're just focused on taking our farmers' milk,
• 4:29
  Speaker 4: taking it out to the world and bringing that as
• 4:31
  Speaker 4: much back as we can back into New Zealand. And
• 4:33
  Speaker 4: hopefully today, you know, the New Zealand public sees that.
• 4:35
  Speaker 2: What about New Zealand First's policy of lifting the access
• 4:39
  Speaker 2: to Fonterra milk from 50 million litres to 500 million litres?
• 4:43
  Speaker 4: With respect to DERA, look, we're early on that process.
• 4:47
  Speaker 4: We've submitted our submission and I think we're due this
• 4:51
  Speaker 4: week or next week, the issues paper will come back out.
• 4:54
  Speaker 4: And as we've done in the previous years, we'll work through,
• 4:57
  Speaker 4: I think they'll make all of the submissions public.
• 4:59
  Speaker 3: We'll work through that. We'll engage in the process.
• 5:02
  Speaker 4: But, you know, again, our job here is to protect,
• 5:07
  Speaker 4: you know, what is a wonderful co-op and, again, protect
• 5:11
  Speaker 4: those benefits, which it does deliver for our country.
• 5:14
  Speaker 2: Yeah, good stuff, Richard. Thanks very much. Go well. Richard Allen,
• 5:16
  Speaker 2: Fonterra CEO.
• 5:18
  Speaker 1: For more from Newstalk ZB, listen live on air or
• 5:21
  Speaker 1: online and keep our shows with you wherever you go
• 5:24
  Speaker 1: with our podcasts on iHeart Radio.