Latest / Best of Business / Miles Hurrell: Fonterra CEO on the company's $1.1 billion net profit

Transcript

Miles Hurrell: Fonterra CEO on the company's $1.1 billion net profit · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks. There'd be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Fonterra is Creaming It, the country's largest dairy co op,
• 0:20
  Speaker 2: is posted a net profit of one point one billion
• 0:22
  Speaker 2: dollars for the year, will be paying a total dividend
• 0:24
  Speaker 2: of fifty five cents per share. And the good news
• 0:26
  Speaker 2: didn't stop there. Farmgate milk price for the dairy season
• 0:29
  Speaker 2: was raised fifty cents to a midpoint price of nine
• 0:32
  Speaker 2: dollars per kg of milk solids and Miles Hurrel is
• 0:34
  Speaker 2: one Terra's chief executive Hay Miles Heather. How good is this?
• 0:38
  Speaker 3: Yeah? Great result stars have aligned is as you say,
• 0:43
  Speaker 3: a good dividend for the year, but also a strong
• 0:45
  Speaker 3: outlook for the year head so you know, farmers are
• 0:46
  Speaker 3: happy and just shows that you put your focus out
• 0:50
  Speaker 3: the team have lent into it and delivered a good result.
• 0:52
  Speaker 2: Which are the stars that have aligned for you?
• 0:54
  Speaker 3: Well, we're starting to see a bit of demand starting
• 0:57
  Speaker 3: to re emerge out of China, which has been a
• 0:58
  Speaker 3: bit sluggish. We've talked about that previously, but also the
• 1:02
  Speaker 3: areas we've really focused in terms of our food service
• 1:05
  Speaker 3: and our actual ingredients businesses. You know, they're really starting
• 1:08
  Speaker 3: to to hit their straps and so you know these
• 1:10
  Speaker 3: things are all come together at the same time and
• 1:12
  Speaker 3: are really pleased to be able to put the results
• 1:14
  Speaker 3: out today.
• 1:14
  Speaker 2: Yeah, and have you heard from many of the farmers
• 1:16
  Speaker 2: about that that farm gate milk.
• 1:18
  Speaker 3: Price many which is which is a great a great
• 1:22
  Speaker 3: news story, as you say, so be some great feedback.
• 1:24
  Speaker 3: But the management team and the board will be visiting
• 1:27
  Speaker 3: farmers next week so will get it face to face.
• 1:30
  Speaker 3: But over all there please, so you.
• 1:31
  Speaker 2: Guys hear from the farmers not just when they're upset,
• 1:33
  Speaker 2: but when they're happy. They send you messages as well.
• 1:36
  Speaker 3: Yeah they do, I mean to be fair, it's not
• 1:38
  Speaker 3: as many when when they're of an upset and saying
• 1:40
  Speaker 3: that no, that they know, they understand the value of
• 1:43
  Speaker 3: the cooperative and they will give credit where credits do so,
• 1:45
  Speaker 3: so I know we've had a lot of that today.
• 1:47
  Speaker 2: That's good. It sounds like next year you're a little
• 1:51
  Speaker 2: bit worried about is that what's going on here?
• 1:53
  Speaker 3: Well, I mean we need to be a little bit
• 1:55
  Speaker 3: cautious and we asked to see you know that the
• 1:57
  Speaker 3: dairy side of things emerged from China, but but at
• 1:59
  Speaker 3: macro level, we've still got some issues we need to
• 2:01
  Speaker 3: watch really closely. The geopolitics haven't changed it all internationally,
• 2:05
  Speaker 3: so we need we need to keep an eye on that.
• 2:07
  Speaker 3: But we do need to keep an on on you know,
• 2:09
  Speaker 3: from a cautious perspective. But you know, as we sit
• 2:11
  Speaker 3: here today, you know that the things are looking positive
• 2:13
  Speaker 3: for the year.
• 2:13
  Speaker 2: Hit how are you going selling the consumer brands?
• 2:17
  Speaker 3: Early days? So we've appointed some some advisers to help
• 2:20
  Speaker 3: us through that next phase, but no real update. We're
• 2:23
  Speaker 3: sort of on track with we would expect to be
• 2:24
  Speaker 3: at this time of the process, probably in a position
• 2:27
  Speaker 3: sort of late November I think to give another update.
• 2:29
  Speaker 3: But we talked about a sort of a twelve to
• 2:31
  Speaker 3: eighty month process in last May, so you know we're
• 2:34
  Speaker 3: still on track for that, but a bit early to say.
• 2:37
  Speaker 2: So if you're going to make an update, and you're
• 2:39
  Speaker 2: going to give us an update in November, that suggests
• 2:41
  Speaker 2: that you might be talking to someone, is that what's up?
• 2:44
  Speaker 3: No, I wouldn't. I wouldn't go that far. I mean,
• 2:45
  Speaker 3: we've had we've had a lot of interest. As I
• 2:47
  Speaker 3: think we've said previously, also we've had a lot of
• 2:49
  Speaker 3: interest in it. But but the what will come out
• 2:51
  Speaker 3: in November is probably what the process, what the sale
• 2:53
  Speaker 3: process would look like, and then and then we'll probably
• 2:56
  Speaker 3: take it to market officially sort of come New Years.
• 2:58
  Speaker 3: So we're still still early in the process and it's
• 3:01
  Speaker 3: a complex that of you know that these businesses are
• 3:03
  Speaker 3: very intertwined. You know, we've got factories around the country
• 3:05
  Speaker 3: here in New Zealand that make for consumers and they
• 3:08
  Speaker 3: may for ingredients and food service. So it's not a
• 3:10
  Speaker 3: case of just picking up a brand and selling it.
• 3:12
  Speaker 3: There's a lot of sort of unwhining to do that.
• 3:14
  Speaker 3: That's what's taking the time.
• 3:16
  Speaker 2: Myles, how worried are you about power prices in this country?
• 3:20
  Speaker 3: Look, I am power prices is one, but security is
• 3:24
  Speaker 3: probably the other one that we need to consider. And
• 3:26
  Speaker 3: I know there's a lot of talk around sort of
• 3:28
  Speaker 3: lifting the oil and gas band, but you know, maybe
• 3:30
  Speaker 3: maybe the horse has bolted on some of that and
• 3:32
  Speaker 3: I'll see some of the announcements around told energy with
• 3:34
  Speaker 3: people today and you know that those are concerns for us,
• 3:37
  Speaker 3: and so you know, we can't be in a position
• 3:39
  Speaker 3: where we don't have a gas supply or energy supply,
• 3:43
  Speaker 3: So that is a concern for us, and we need
• 3:45
  Speaker 3: to sort of take the destin into our own hands
• 3:46
  Speaker 3: and make sure we have solutions for that, which we'll do.
• 3:49
  Speaker 3: What kind of solutions, well, we need to think about,
• 3:52
  Speaker 3: you know, what, what energy sources do we use. You know,
• 3:55
  Speaker 3: at the moment, we've sort of got accommodation of natural
• 3:57
  Speaker 3: gas and coal. We're obviously exiting coal as we'll see previously,
• 4:00
  Speaker 3: but you know, as natural gas. The answer do when
• 4:02
  Speaker 3: you think about, you know, speeding up some electorication or
• 4:04
  Speaker 3: speeding up some of our wood biomess or wood palettes
• 4:07
  Speaker 3: sort of baller, So we need we need to start
• 4:09
  Speaker 3: thinking about those quite seriously. And again back to the results.
• 4:12
  Speaker 3: You know, have a balance sheet to be able to
• 4:13
  Speaker 3: think like that, it's bloody helpful when we have been previously.
• 4:16
  Speaker 2: Do you believe so would your preference be to you know,
• 4:20
  Speaker 2: obviously yxit coal, and would your preference be to replace
• 4:23
  Speaker 2: that with gas natural gas?
• 4:26
  Speaker 3: No, I certainly not replace the coal with natural gas,
• 4:28
  Speaker 3: but I think we thought natural gas had a longer
• 4:30
  Speaker 3: runway before we started to think about moving those plants
• 4:33
  Speaker 3: out of out of natural gas on onto something else,
• 4:36
  Speaker 3: but we may need to bring those forward, I guess.
• 4:38
  Speaker 1: And would you like that?
• 4:40
  Speaker 2: Would you like us to find more gas?
• 4:43
  Speaker 3: If we could find more gas, it'll be very helpful.
• 4:45
  Speaker 2: Do you think there's more gas?
• 4:47
  Speaker 3: Oh, look at I'm outside of my wheelhouse on that
• 4:49
  Speaker 3: one either. You know, if there is more gas, it
• 4:51
  Speaker 3: would be great for it to come onto the market.
• 4:53
  Speaker 3: But as we sit there today, it's certainly constrained, and
• 4:56
  Speaker 3: that worries not just us, but I think the industry
• 4:58
  Speaker 3: as a whole.
• 4:59
  Speaker 1: For more from News Talk Said, be listen live on
• 5:02
  Speaker 1: air or online, and keep our shows with you wherever
• 5:05
  Speaker 1: you go with our podcasts on iHeartRadio