Fonterra Shareholders (FSF) H2 2024 earnings summary

Executive summary

• Net earnings per share reached NZD 0.70, at the top end of guidance, with profit after tax of NZ$1,168 million, reflecting strong performance despite market volatility and geopolitical uncertainty.

• Total dividend for the year was NZD 0.55 per share, including a special dividend of NZD 0.15, marking the second largest payout since formation.

• Return on capital was 11.3%, exceeding the FY 2024 target range of 8%-9% and above the five-year average.

• Total Shareholder Return for the past 12 months was 94.6%, outperforming the S&P NZX50 Index.

• Strategic review completed, with plans to divest global Consumer business, Fonterra Oceania, and Sri Lanka.

Financial highlights

• EBIT from continuing operations was NZ$1,560 million, down from NZ$1,755 million year-over-year but well above previous years.

• Revenue declined due to lower product prices and a 1% drop in volumes, but sales mix shifted toward higher-margin Foodservice and Consumer channels.

• Net debt reduced by NZD 600 million year-over-year, from NZD 3.2 billion to NZD 2.6 billion, reflecting strong operating performance.

• Total payout per share was NZD 8.38, down from NZD 8.72.

• FSF unit price rose to NZD 5.41 from NZD 3.00 over the year.

Outlook and guidance

• FY 2025 forecast net earnings per share set at NZD 0.40–0.60, with expectations of similar underlying performance and strong margins.

• 2024/25 forecast Farmgate Milk Price is NZD 9–10 per kgMS, reflecting recent price strength and constrained supply.

• Higher tax expense anticipated as tax losses are exhausted, resulting in the generation of imputation credits for shareholders.

• Targeting a significant capital return if the Consumer business is divested.

• Revised strategy with a sharper focus on core strengths to be shared with shareholders soon.