November 19, 2024 • 6 mins
Fonterra's COO comments on yet another good GDT Auction (up 1.9%, WMP + 3.2%) and the prospects of a $10 milk price.
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Speaker 1 (00:00):
Anna Pella is the chief operating officer for Fonterra. Anna,
Yet yet another good global dairy trade auction overnight one
point nine percent. Most importantly, I guess whole milk powder
three point two percent. I'm just waiting for Miles or
Peter McBride to announce a ten dollars milk price?
Speaker 2 (00:20):
How far?
Speaker 1 (00:21):
How long will I have to wait?
Speaker 2 (00:22):
Anna Well cure to Jamie. Unfortunately, I'm not sure I
can specifically answer that question for you. But wonderful to
see the continued strength and the global dairy trade. Certainly,
you know, it gives us confidence in terms of where
that milk price is sitting and really driven through the
strength from China. I think we're seeing continued reduction in
(00:47):
based prices, based raw milk prices out of China, and
so that's certainly pushing the Chinese onto the global dairy trade,
which is helping these prices stay up high. Well.
Speaker 1 (00:57):
Interestingly, we're hearing kind of mixed messages out of China.
Some people. One of our guys on the ground in
Shanghai's there is he's seeing no and inverted commerce, green
shoots and the domestic economy. Yet we're hearing the meat
companies are saying that China is back in the game.
It's certainly the case with dairy products. So and I
know you've just been recently in China and what are
(01:19):
you hearing? What are you seeing?
Speaker 2 (01:21):
I think absolutely green shirts. So yeah, I know you
spoke to Mars a couple of weeks ago when we
were up at the IE and you know what an
appressive event that was. We actually took the opportunity to
get out into some of the third tier cities. The
one I visited Young Joe to ours north of Shanghai
four point five million people, very modern, attractive, advanced city
(01:44):
and you know, real opportunity I think in the future
for New Zealand exporters.
Speaker 1 (01:50):
Let's have a look at I don't know whether you've
got these. I'm sure you will because your chief operating
officer Anna, you don't get to that lofty position without
knowing these off the top of your head. But look
in terms of milk volumes. And we were talking to
Mark Delatore on yesterday's show from your Compete at an
Open Country Dairy and he was saying, aside from Southland,
the rest of the country's going great guns is that
(02:11):
what Fonterra is finding.
Speaker 2 (02:13):
We are certainly seeing that as well. So I think
just under five percent season to date and you know,
great strong grass growth climatically very positive. But also these
prices are encouraging our farmers in terms of the desire
to produce, and we are watching, you know, when the
prices are high like they are, there's a potential volatility
(02:36):
that comes in there. We're watching milk flow, We're watching
and looking out for climatic changes. But plenty of grass
and upbeat farmers, which is exactly exactly what we want
to see.
Speaker 1 (02:48):
And by the sounds of things, you're not going to
have any trouble finding a home for the milk.
Speaker 2 (02:54):
I don't think so. I think strong demand continuing in
many of the region's globally. The balance for us is
whether we need to put more into homework power and
what that then does in terms of the economics of
those prices.
Speaker 1 (03:10):
As your decision to sell off your consumer brands being
greeted well by your farmer shareholders, well, I think.
Speaker 2 (03:18):
It's fair to say it would be mixed, and a
lot of that actually comes from the ability to share
information at this early stage where you would have seen
with announced recently that we've made a decision in terms
of the potential offerings there a trade sale or an IPO,
and the team now will spend several months understanding those
(03:40):
of the advisors a lot more so we can finally
bring more information to our farmers and unit holders, and
we absolutely know that they want that information. I think
through recent farmer road shows there's an understanding of why
the organization sees, the co op sees that there is
more potential through another owner and the ability to return
(04:04):
considerable capital to our pharmacy holders and unit holders.
Speaker 1 (04:08):
Yeah, so what is this worth? About three billion dollars?
Am I? Roughly in the right area there.
Speaker 2 (04:13):
Well, we've seen some external commentators make some comments around
what it could be worth. Certainly that's not something we're
able to make public or would make any statement at
this point. But that's when you think about the revenue
of the business that's broadly roots and we'll see in
terms of what the greatest value we can bring back
(04:34):
for our pharmacy holders.
Speaker 1 (04:35):
So that's sort of circa two dollars a year, am
I right with that assumption?
Speaker 2 (04:42):
Circa yes, yes, circa.
Speaker 1 (04:44):
Well, I gave myself a bit of wriggle room there,
and I note that your share price I need to
look it up on the phone. Michelle might have a
quick look at it for me. I don't know what
it is you got up to high fours. I don't
know where you are right at the moment, but you know,
this time a year ago, November twenty twenty three, I
think you were down at about two bucks or just
over two bucks. So yes, so Fonterra farmer shareholders have
(05:06):
seen their balance sheets improve markedly. And if you're high
fours now and we add another another two bucks on there, Anna,
you're back to the healthy in days of a six
or seven dollars share price.
Speaker 2 (05:19):
I mean that is absolutely an intention through this process
is to ensure there's a prosperous, sustainable, prosperous environment for
our farmer's long term sustainable cooperative and creating the best
value we can back for them. And so the share
price is certainly improving along those lines, which is fantastic
to see.
Speaker 1 (05:39):
And Michelle's just passed me are we know it's four
dollars fifty so it's drifted back awe, But anyhow, it's
a hell of a lot better than just over two
dollars this time a year ago. Look, thank you very much,
and can you just give us the exclusive when Miles
comes on and announces the big ten anna, can you
do that?
Speaker 2 (05:55):
Well, you know Jamie for sure.
Speaker 1 (05:57):
Thank you, thank you very much, and I just have
to hipped my hat to that excellent communications man Henry Ackland.
He served Fonterra admirably last night in Auckland a launch
of the Farmer's Poor Bear. He poured quite a bit
down his neck only for the good of the cooperative
and it didn't cost the cooperative a sent Anna very
(06:18):
good congratulating, thank you very much and thanks for being
a good sport all
Speaker 2 (06:23):
Right, thank you
Anna Pella is the chief operating officer for Fonterra. Anna,
Yet yet another good global dairy trade auction overnight one
point nine percent. Most importantly, I guess whole milk powder
three point two percent. I'm just waiting for Miles or
Peter McBride to announce a ten dollars milk price?
Speaker 2 (00:20):
How far?
Speaker 1 (00:21):
How long will I have to wait?
Speaker 2 (00:22):
Anna Well cure to Jamie. Unfortunately, I'm not sure I
can specifically answer that question for you. But wonderful to
see the continued strength and the global dairy trade. Certainly,
you know, it gives us confidence in terms of where
that milk price is sitting and really driven through the
strength from China. I think we're seeing continued reduction in
(00:47):
based prices, based raw milk prices out of China, and
so that's certainly pushing the Chinese onto the global dairy trade,
which is helping these prices stay up high. Well.
Speaker 1 (00:57):
Interestingly, we're hearing kind of mixed messages out of China.
Some people. One of our guys on the ground in
Shanghai's there is he's seeing no and inverted commerce, green
shoots and the domestic economy. Yet we're hearing the meat
companies are saying that China is back in the game.
It's certainly the case with dairy products. So and I
know you've just been recently in China and what are
(01:19):
you hearing? What are you seeing?
Speaker 2 (01:21):
I think absolutely green shirts. So yeah, I know you
spoke to Mars a couple of weeks ago when we
were up at the IE and you know what an
appressive event that was. We actually took the opportunity to
get out into some of the third tier cities. The
one I visited Young Joe to ours north of Shanghai
four point five million people, very modern, attractive, advanced city
(01:44):
and you know, real opportunity I think in the future
for New Zealand exporters.
Speaker 1 (01:50):
Let's have a look at I don't know whether you've
got these. I'm sure you will because your chief operating
officer Anna, you don't get to that lofty position without
knowing these off the top of your head. But look
in terms of milk volumes. And we were talking to
Mark Delatore on yesterday's show from your Compete at an
Open Country Dairy and he was saying, aside from Southland,
the rest of the country's going great guns is that
(02:11):
what Fonterra is finding.
Speaker 2 (02:13):
We are certainly seeing that as well. So I think
just under five percent season to date and you know,
great strong grass growth climatically very positive. But also these
prices are encouraging our farmers in terms of the desire
to produce, and we are watching, you know, when the
prices are high like they are, there's a potential volatility
(02:36):
that comes in there. We're watching milk flow, We're watching
and looking out for climatic changes. But plenty of grass
and upbeat farmers, which is exactly exactly what we want
to see.
Speaker 1 (02:48):
And by the sounds of things, you're not going to
have any trouble finding a home for the milk.
Speaker 2 (02:54):
I don't think so. I think strong demand continuing in
many of the region's globally. The balance for us is
whether we need to put more into homework power and
what that then does in terms of the economics of
those prices.
Speaker 1 (03:10):
As your decision to sell off your consumer brands being
greeted well by your farmer shareholders, well, I think.
Speaker 2 (03:18):
It's fair to say it would be mixed, and a
lot of that actually comes from the ability to share
information at this early stage where you would have seen
with announced recently that we've made a decision in terms
of the potential offerings there a trade sale or an IPO,
and the team now will spend several months understanding those
(03:40):
of the advisors a lot more so we can finally
bring more information to our farmers and unit holders, and
we absolutely know that they want that information. I think
through recent farmer road shows there's an understanding of why
the organization sees, the co op sees that there is
more potential through another owner and the ability to return
(04:04):
considerable capital to our pharmacy holders and unit holders.
Speaker 1 (04:08):
Yeah, so what is this worth? About three billion dollars?
Am I? Roughly in the right area there.
Speaker 2 (04:13):
Well, we've seen some external commentators make some comments around
what it could be worth. Certainly that's not something we're
able to make public or would make any statement at
this point. But that's when you think about the revenue
of the business that's broadly roots and we'll see in
terms of what the greatest value we can bring back
(04:34):
for our pharmacy holders.
Speaker 1 (04:35):
So that's sort of circa two dollars a year, am
I right with that assumption?
Speaker 2 (04:42):
Circa yes, yes, circa.
Speaker 1 (04:44):
Well, I gave myself a bit of wriggle room there,
and I note that your share price I need to
look it up on the phone. Michelle might have a
quick look at it for me. I don't know what
it is you got up to high fours. I don't
know where you are right at the moment, but you know,
this time a year ago, November twenty twenty three, I
think you were down at about two bucks or just
over two bucks. So yes, so Fonterra farmer shareholders have
(05:06):
seen their balance sheets improve markedly. And if you're high
fours now and we add another another two bucks on there, Anna,
you're back to the healthy in days of a six
or seven dollars share price.
Speaker 2 (05:19):
I mean that is absolutely an intention through this process
is to ensure there's a prosperous, sustainable, prosperous environment for
our farmer's long term sustainable cooperative and creating the best
value we can back for them. And so the share
price is certainly improving along those lines, which is fantastic
to see.
Speaker 1 (05:39):
And Michelle's just passed me are we know it's four
dollars fifty so it's drifted back awe, But anyhow, it's
a hell of a lot better than just over two
dollars this time a year ago. Look, thank you very much,
and can you just give us the exclusive when Miles
comes on and announces the big ten anna, can you
do that?
Speaker 2 (05:55):
Well, you know Jamie for sure.
Speaker 1 (05:57):
Thank you, thank you very much, and I just have
to hipped my hat to that excellent communications man Henry Ackland.
He served Fonterra admirably last night in Auckland a launch
of the Farmer's Poor Bear. He poured quite a bit
down his neck only for the good of the cooperative
and it didn't cost the cooperative a sent Anna very
(06:18):
good congratulating, thank you very much and thanks for being
a good sport all
Speaker 2 (06:23):
Right, thank you
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