September 25, 2025 • 5 mins
Fonterra's CEO says cheaper butter prices could be on the horizon.
The dairy co-op's announced a 13 percent rise in annual operating profit and a record-high final milk payout of $10.16 per kg.
Chief Executive Miles Hurrell says it's a great result for farmers.
He says the price of wholesale butter globally has fallen 15 percent in the past two months.
"At some point, that'll flow through to the supermarkets - I suspect that they'll set their own prices, but that should flow through and give it an element of relief."
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Speaker 1 (00:09):
You're listening to a podcast from News talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Regions will get a double whammy boost with this Fonterra result.
Net profit up over a billion dollars. Shareholders will get
their highest ever total dividend of fifty seven cents a
share for the year, which is great. Add to that
the consumer brand sale three out of the four billion
of that is going back to Miles Harrell is Fonterra's
chief executive with me tonight, Miles, good evening, good edning. Ruh,
how did you feel about that result?
Speaker 1 (00:38):
Oh?
Speaker 3 (00:38):
Superb result. Our team has got up and delivered and
you know, please be able to stand it there this
morning and took to a farmers and deliver a decent
milk price but also decent earnings on top. So no,
overall superb result for the team.
Speaker 2 (00:49):
What are you expecting in the year ahead? I mean,
obviously it's been a great year dairy price wise. What
are you expecting going forward?
Speaker 3 (00:56):
Yeah, so to finish the year ten sixteen ten dotals
sixteen per kilogram for the last season, and the forecast
ahead still remains ten dollars a second ye in a
row forecast of ten dollars, which has we've never been
done before. Of course, still a bit of uncertainty out
there in the international market, and we're only in the
early stages, so a lot of the water to go
unto the bridge. But as we see here today, feel
pretty good about ten dollars for the second year in
(01:17):
a row.
Speaker 2 (01:18):
When you say uncertainty, do you mean supply stuff or
trade stuff, we'll both.
Speaker 3 (01:23):
Mainly trade geopolitics. It just it just puts a bit
of uncertainty in the minds of buyers, whether they be
in the US or throughout Asia. It just puts unsettledness
into the market, and so you know, to buyers sit
around and wait a little bit, and does that soften
the market? But you know, at the same time, you
know we've got a good product to sell and the
customs of wanting it, so those things balance out, I
(01:44):
think at a good ten dollars.
Speaker 2 (01:45):
Again, locally, the price of butter is obviously being very
big on the minds of consumers. Is it frustrating for
you to hear that debate and to hear the reaction
from some of our politicians.
Speaker 3 (01:58):
Well, I think we should acknowledge. I mean, it has
been tough out there for consumers in the price of
dairy products has risen in the last twelve eighty months,
caught quite significantly, so we should acknowledge that it has
been tough. You know. That said the who also a
better price has probably come off about fifteen percent actually
in the last two months. So you know, at some
point that will flow through to the supermarkets. I suspect
that they'll set their own prices, but that should flow
(02:18):
through and give an element of relief. But you know,
at the end of the day, as we've said previously,
you know, the international market has been quite buoyant, which
which delivers these returns are back to New Zealand and
unfortunately that flows through to the markets here.
Speaker 2 (02:30):
Why the delay for it to flow through, Well.
Speaker 3 (02:34):
Well, I mean depends on what sort of contracts each
of these supermarkets will have, who they're brought from, over
what periods, where they be quarterly contracts or spot pricing.
So you know, there might be some inventory in the
system and when you go to the supermarket, it's there's
stock there that didn't arrive this morning. It might have
been there for us for a few weeks and so
those things take some time to flow through. But you know,
as I say, the wholesale price has come down steadily
(02:54):
in the last of a month or two, and I
expect that to flow through to at some point.
Speaker 2 (02:59):
Roughly north of four billion for the sale of their
consumer business and three billion going to shareholders, the remainder
being reinvested into well.
Speaker 3 (03:09):
So we have a range of things that we're looking at.
So we haven't made any calls on that other than
we've already got a pipeline of growth projects out there,
including an additional butter capacity we are putting into the
South Island at some point next year. So the range
of sort of growth projects predominantly for the export market again,
so some of it will go towards that. We also
want to keep a conservative balance sheet and it's important
(03:32):
in a corporate position, and we're dealing an international market
to maintain a conservative balance sheet. So a combination of
those things. But at the same time, you know, we
are in a really good position. It gives us opportunity
to explore other alternatives as they come up.
Speaker 2 (03:44):
China, how are you feeling about it? They are obviously
a government they're trying to stoke consumer demand. It has
been relatively strong for us. How significant is that now
in terms of the business and how significant will it
be going forward.
Speaker 3 (03:59):
Yeah, Look, it's still a third of our book, maybe
even slightly more than a third of our book, and
we have been strong, robust demand in the last twelve months. Yeah,
it has come off from where it was two or
three years ago, and I think we've talked about that.
But at the same time, we are still seeing strong demand.
But at the same time, you know that the innovation
cycle is quite fast and China, you've got to continue
to find new products in new markets and new customers,
(04:20):
which our team in the markets do so feeling good
about that. I think they've you know, they've seen the
GDP growth actually start to increase again from the slumps
they had a year ago, and so we'll ride the
wave of that, but certainly not back to where it
was in twenty twenty three. But we're in a pretty
good position.
Speaker 2 (04:36):
I've had text in the show this afternoon miles from farmers,
from your suppliers saying we think it's crazy to sell off,
and it's not. You know, there is a range of views,
but some saying it's crazy to sell off part of
the company. Now that it's running well, value add et cetera,
what do you say.
Speaker 3 (04:50):
Well, look, it's running, it's running a heck a lot
better than where it's been in the history of a carpet.
I'd go as far as to say that said that
still doesn't in our minds get to the cost of
capital that our farmers have invested in. So you know,
when you operating in a finite resource environment, whether that
be cash or others, you've got to put your your
farmer's capital things that we're going to get the best
return and consumers. Still is the lag out of that.
(05:12):
So the economics of it, I think are quite clear.
I think you get to the emotional element from our
farmers that their brands that they've invested in, and we
all understand them. But at the end of the day,
I've got a lot through that and say what's the
right thing to do for the cop well and to
the next generation or two will take that to farmers
the end of October for a vote. We're out on
farm next week talking to a range of farmers to
(05:32):
get their views and to answer their questions. But you know,
we feel confident in our position going forward, but ultimately
files will have the end of October.
Speaker 2 (05:40):
All right, Myles. Appreciate your time tonight, Miles, and congratulations
on the result. Miles Harold, Chief executive at Volunteering.
Speaker 1 (05:45):
For more from News Talks B, Listen live on air
or online, and keep our shows with you wherever you
go with our podcasts on iHeartRadio
You're listening to a podcast from News talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Regions will get a double whammy boost with this Fonterra result.
Net profit up over a billion dollars. Shareholders will get
their highest ever total dividend of fifty seven cents a
share for the year, which is great. Add to that
the consumer brand sale three out of the four billion
of that is going back to Miles Harrell is Fonterra's
chief executive with me tonight, Miles, good evening, good edning. Ruh,
how did you feel about that result?
Speaker 1 (00:38):
Oh?
Speaker 3 (00:38):
Superb result. Our team has got up and delivered and
you know, please be able to stand it there this
morning and took to a farmers and deliver a decent
milk price but also decent earnings on top. So no,
overall superb result for the team.
Speaker 2 (00:49):
What are you expecting in the year ahead? I mean,
obviously it's been a great year dairy price wise. What
are you expecting going forward?
Speaker 3 (00:56):
Yeah, so to finish the year ten sixteen ten dotals
sixteen per kilogram for the last season, and the forecast
ahead still remains ten dollars a second ye in a
row forecast of ten dollars, which has we've never been
done before. Of course, still a bit of uncertainty out
there in the international market, and we're only in the
early stages, so a lot of the water to go
unto the bridge. But as we see here today, feel
pretty good about ten dollars for the second year in
(01:17):
a row.
Speaker 2 (01:18):
When you say uncertainty, do you mean supply stuff or
trade stuff, we'll both.
Speaker 3 (01:23):
Mainly trade geopolitics. It just it just puts a bit
of uncertainty in the minds of buyers, whether they be
in the US or throughout Asia. It just puts unsettledness
into the market, and so you know, to buyers sit
around and wait a little bit, and does that soften
the market? But you know, at the same time, you
know we've got a good product to sell and the
customs of wanting it, so those things balance out, I
(01:44):
think at a good ten dollars.
Speaker 2 (01:45):
Again, locally, the price of butter is obviously being very
big on the minds of consumers. Is it frustrating for
you to hear that debate and to hear the reaction
from some of our politicians.
Speaker 3 (01:58):
Well, I think we should acknowledge. I mean, it has
been tough out there for consumers in the price of
dairy products has risen in the last twelve eighty months,
caught quite significantly, so we should acknowledge that it has
been tough. You know. That said the who also a
better price has probably come off about fifteen percent actually
in the last two months. So you know, at some
point that will flow through to the supermarkets. I suspect
that they'll set their own prices, but that should flow
(02:18):
through and give an element of relief. But you know,
at the end of the day, as we've said previously,
you know, the international market has been quite buoyant, which
which delivers these returns are back to New Zealand and
unfortunately that flows through to the markets here.
Speaker 2 (02:30):
Why the delay for it to flow through, Well.
Speaker 3 (02:34):
Well, I mean depends on what sort of contracts each
of these supermarkets will have, who they're brought from, over
what periods, where they be quarterly contracts or spot pricing.
So you know, there might be some inventory in the
system and when you go to the supermarket, it's there's
stock there that didn't arrive this morning. It might have
been there for us for a few weeks and so
those things take some time to flow through. But you know,
as I say, the wholesale price has come down steadily
(02:54):
in the last of a month or two, and I
expect that to flow through to at some point.
Speaker 2 (02:59):
Roughly north of four billion for the sale of their
consumer business and three billion going to shareholders, the remainder
being reinvested into well.
Speaker 3 (03:09):
So we have a range of things that we're looking at.
So we haven't made any calls on that other than
we've already got a pipeline of growth projects out there,
including an additional butter capacity we are putting into the
South Island at some point next year. So the range
of sort of growth projects predominantly for the export market again,
so some of it will go towards that. We also
want to keep a conservative balance sheet and it's important
(03:32):
in a corporate position, and we're dealing an international market
to maintain a conservative balance sheet. So a combination of
those things. But at the same time, you know, we
are in a really good position. It gives us opportunity
to explore other alternatives as they come up.
Speaker 2 (03:44):
China, how are you feeling about it? They are obviously
a government they're trying to stoke consumer demand. It has
been relatively strong for us. How significant is that now
in terms of the business and how significant will it
be going forward.
Speaker 3 (03:59):
Yeah, Look, it's still a third of our book, maybe
even slightly more than a third of our book, and
we have been strong, robust demand in the last twelve months. Yeah,
it has come off from where it was two or
three years ago, and I think we've talked about that.
But at the same time, we are still seeing strong demand.
But at the same time, you know that the innovation
cycle is quite fast and China, you've got to continue
to find new products in new markets and new customers,
(04:20):
which our team in the markets do so feeling good
about that. I think they've you know, they've seen the
GDP growth actually start to increase again from the slumps
they had a year ago, and so we'll ride the
wave of that, but certainly not back to where it
was in twenty twenty three. But we're in a pretty
good position.
Speaker 2 (04:36):
I've had text in the show this afternoon miles from farmers,
from your suppliers saying we think it's crazy to sell off,
and it's not. You know, there is a range of views,
but some saying it's crazy to sell off part of
the company. Now that it's running well, value add et cetera,
what do you say.
Speaker 3 (04:50):
Well, look, it's running, it's running a heck a lot
better than where it's been in the history of a carpet.
I'd go as far as to say that said that
still doesn't in our minds get to the cost of
capital that our farmers have invested in. So you know,
when you operating in a finite resource environment, whether that
be cash or others, you've got to put your your
farmer's capital things that we're going to get the best
return and consumers. Still is the lag out of that.
(05:12):
So the economics of it, I think are quite clear.
I think you get to the emotional element from our
farmers that their brands that they've invested in, and we
all understand them. But at the end of the day,
I've got a lot through that and say what's the
right thing to do for the cop well and to
the next generation or two will take that to farmers
the end of October for a vote. We're out on
farm next week talking to a range of farmers to
(05:32):
get their views and to answer their questions. But you know,
we feel confident in our position going forward, but ultimately
files will have the end of October.
Speaker 2 (05:40):
All right, Myles. Appreciate your time tonight, Miles, and congratulations
on the result. Miles Harold, Chief executive at Volunteering.
Speaker 1 (05:45):
For more from News Talks B, Listen live on air
or online, and keep our shows with you wherever you
go with our podcasts on iHeartRadio
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