Latest / Early Edition with Ryan Bridge / John Stevenson: Fonterra Co-operative Council Chair on the company's jump in profits, potential impact of the war

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John Stevenson: Fonterra Co-operative Council Chair on the company's jump in profits, potential impact of the war · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Strong result from fon Terra yesterday, seven hundred and fifty
• 0:03
  Speaker 1: million profit beating expectations, up on last year, forecast milk
• 0:07
  Speaker 1: price up. Just don't mention the war. These are and
• 0:11
  Speaker 1: results and there's a lot of disruption in global markers
• 0:13
  Speaker 1: we will have to contend with on the second half.
• 0:16
  Speaker 1: John Stevenson, cheer Fonterra Cooperative Council, joins me this morning.
• 0:19
  Speaker 1: Morning John, Good morning Ryan. What's not to like with that?
• 0:24
  Speaker 2: Oh, not very much. That's certainly a really strong performance
• 0:26
  Speaker 2: from our cooperative Ryan, as he mentioned, both forecast farmgate,
• 0:30
  Speaker 2: milk price and earnings up and a good return for
• 0:34
  Speaker 2: farmers on the capital they've got invested in Fonterra.
• 0:37
  Speaker 1: Yeah, that inter and dividend. Would that be up there
• 0:39
  Speaker 1: with the highest certainly the.
• 0:41
  Speaker 2: Highest that I can find? Ryan, not willing to fully
• 0:44
  Speaker 2: commit to that. Will do a bit more work on that,
• 0:46
  Speaker 2: but in my research it's the highest that I can find.
• 0:49
  Speaker 1: Mainland. How much of the overall result yesterday was down
• 0:54
  Speaker 1: to mainland? In other words, how much will you be
• 0:56
  Speaker 1: missing out on once it's gone?
• 0:59
  Speaker 2: So the the mainland performance of Fonterra paying farmers in
• 1:03
  Speaker 2: additional sixteen cents per year in recognition of the performance
• 1:07
  Speaker 2: of Mainland, but it's important to note that you know
• 1:10
  Speaker 2: there's no retained earnings in that or depreciation emortalization. The
• 1:15
  Speaker 2: return on capital from that Mainland group was nine percent.
• 1:18
  Speaker 2: That's historically quite strong for that group. Ingredients returned eleven
• 1:23
  Speaker 2: percent and food service twelve point six percent, so strong performance,
• 1:28
  Speaker 2: that's still well behind the other two and groups within
• 1:30
  Speaker 2: the business.
• 1:31
  Speaker 1: I was reading about tip Top yesterday, just what's happened
• 1:34
  Speaker 1: to Tiptop since it was sold off and their earnings
• 1:37
  Speaker 1: trebled basically because it was sold to somebody who specializes
• 1:42
  Speaker 1: in that area and they can make more money out
• 1:44
  Speaker 1: of it. So probably the same will happen with Mainland,
• 1:47
  Speaker 1: I would assume, But it's just not an area that
• 1:50
  Speaker 1: Fonterra can get more juice out the leman of.
• 1:55
  Speaker 2: Yeah, and I think it's important that you actually you
• 1:57
  Speaker 2: recognize the expertise of different businesses and those consumer business
• 2:01
  Speaker 2: is a really capital intensive owners have to employ a
• 2:04
  Speaker 2: lot of capital in them. Fontira is a really big
• 2:07
  Speaker 2: business with a really successful ingredients and food service. It's
• 2:12
  Speaker 2: really hard in a co op to get to raise
• 2:14
  Speaker 2: capital to invest the appropriate amount across all three channels,
• 2:18
  Speaker 2: so we've been through quite the process on that, but
• 2:21
  Speaker 2: that's certainly acknowledge what you've said there right.
• 2:23
  Speaker 1: On a scale of one to ten, John, the war
• 2:25
  Speaker 1: how worried.
• 2:27
  Speaker 2: Our farmers are certainly certainly worried, and you know, who
• 2:30
  Speaker 2: knows how long this is going to last. For I
• 2:33
  Speaker 2: understand that Fontira has got a degree of concern around
• 2:37
  Speaker 2: the uncertainty, and obviously we export more than ninety five
• 2:40
  Speaker 2: percent of our product overseas, so it will have some
• 2:44
  Speaker 2: impact that. I think the key thing for us as
• 2:46
  Speaker 2: farmers is seeing what Fontira, how Fonterira deals with it.
• 2:50
  Speaker 2: We've got strong partnerships with Kata to make sure our
• 2:53
  Speaker 2: products get to market. But when you look at a
• 2:56
  Speaker 2: non farm level, things like fertilizer, fuel, maybe interest traits
• 3:00
  Speaker 2: as well, they'll have an impactor. You know, I was
• 3:03
  Speaker 2: talking to a contractor just down the road yesterday. They're
• 3:06
  Speaker 2: using one hundred and thirty thousand later the these l
• 3:08
  Speaker 2: a months, so it's pretty material impact on that small business.
• 3:13
  Speaker 1: John, appreciate your time this morning, John Stephenson sheer Fonterra
• 3:16
  Speaker 1: Cooperative Counselor.
• 3:18
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• 3:21
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• 3:24
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