August 21, 2025 • 6 mins
Fonterra’s chief executive discusses the co-op’s agreement to sell its consumer and associated businesses to French food group Lactalis for $3.845 billion.
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Episode Transcript
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Speaker 1 (00:00):
This man is full of good news. He is the
chief executive of Fonterra, our biggest farming company and co operative.
Miles Hurrele, you've agreed to sell your consumer and associated
businesses to lack Talis for three point eight four or
five billion dollars? Is this going to get universal farmer support?
Do you reckon?
Speaker 2 (00:20):
Miles Jamie Well, I mean the headline number you talk to,
it's a pretty good result. Team have been working around
the clock on this for a number of months now,
so I know we're act. We'll take it to our
farm at the end of October. They ultimately make their
own calls, but you know, the fact we're out there
talking about giving two dollars a yearback, you know, three
point two billion dollars of that three point eight I
(00:41):
think that she gets some pretty good support from our farmer.
Speaker 1 (00:43):
You're dangling a very big carrot in front of the
dairy farmers there, Miles Well, I.
Speaker 2 (00:47):
Wouldn't call it a carrot. I mean, ultimately, it's their capital,
so we just think let's do the right thing with it.
From their perspective, they've invested in this business for a
number of years and you know, as we've talked about
it and given the return over the long team that
we want that consumer business, so the right thing to
do is to give it back.
Speaker 1 (01:05):
Is there an argument, and we had a text earlier
in the shows suggesting it might make dairy products more
expensive for New Zealand consumers. Any logic to that argument?
Speaker 2 (01:15):
Hard to see that logic to be fair. I mean,
the competed environment doesn't change, you know, effectually removing us
from the consumer market and put in another player. So
I wouldn't see that changing at all. If anything, you'd
see someone like Luck the least that could potentially bring
in some other international brands that they own into the
New diital market that they may see an opportunity for.
So I wouldn't see any change in the New Zealand
(01:38):
competitive environment internationally, you know. I think it's a great
new story that they'll grow. I think they'll take to
another level that we haven't been able to do internally,
and as a result, we'll be supplying the additional ingredients
and fresh milk to support big growth.
Speaker 1 (01:50):
Yeah, well that's sort of the key part of the agreement.
I guess the fact that you've locked in the supply
from the Fonterra farmer.
Speaker 2 (01:56):
Shareholders exactly that, and that was a key part, not
not just for our own farmers, shy holders because they
want to see their milk go into those brands. You
know that that was an important conversation with people with
them for quite some time. But at the same time
it was critical for lack deletion of the conversations we've
had with them. They understand the importance of the brands
and the strength of those brands. They understand that the
(02:17):
manufacturing factories that they're buying, but at the same time
they also know they're worthless. I haven't got raw material
to go through it, and the good stuff that their
farmers do is critical to that. So no, that's a
great one one for everyone. I think of this one.
Speaker 1 (02:31):
How long does that supply agreement last?
Speaker 2 (02:33):
For well, they vary as easy to appreciate. You know,
there's fresh milk at one of the spectrum, which goes
into a sort of an anchor two leader, and then
there's a whole lot of ingredients that might go into
some specially specialty products. So they vary across the board.
You know, the fresh milk want to give you an
idea of sort of ten years a minimum starting points,
so that you give a good indication to our shoeholders
that we were.
Speaker 1 (02:53):
At what's the process from here on in to get
this rubber stamped or in?
Speaker 2 (02:58):
Yeah, so thirty towards the end of oct I think
thirty October. We're looking at this point of a farmer vote.
There will be we've got our annual results coming out
towards end the September. We'll go through and our conversations
with farmers through that period towards the end of October.
For that vote, there's obviously regulatory approvals that are required.
So with that, you know competition tribunals internationally, with it
(03:19):
be in Australia not here in New Zealand from that perspective.
And then there's the sort of OO equivalents. They exist
both here Australia, I think, Saudi and Kuwait have got
a couple of others. So those are formal process we
need to go through. At the end of the day,
we don't see any major hicckups with that. That's just
a time process, we believe. So hopefully by the midway
(03:41):
through Canada twenty six will be able to close us out.
Speaker 1 (03:45):
Yesterday, you came out and announced ten dollars fifteen. That's
the new midpoint, and you have narrowed it right down,
so that's we can probably call that locked and loaded
for twenty four, twenty five, perhaps more interestingly, twenty five
twenty six ten dollars. It's pretty rock solid at the moment.
Speaker 2 (04:01):
Is it well as good? And as you remember, we
moved away from that midpoint for the current season, which
which really reflecting we saw more downside risk on the
back of the introduction of tariffs in the US and
the sort of global uncertainty. We've knocked the bottom of
that range off now, which you know, we've kept the
ten dollars there as our position, but we've taken that
low end off because we have we've had confidence in
(04:23):
the early part of our season. Milk is starting to
flow now, so we obviously need to see a little
bit more of that soul before we have any confidence
in doing anything further. But the last two or three
GDT events gives a pretty good indication that it's pretty
solid out there.
Speaker 1 (04:37):
You mentioned the tariffs. How's Trump treating you.
Speaker 2 (04:43):
Well, I mean, look, it's not helpful we can say that.
I mean, you know, ten percent was disruptive and a
bit of a pain in the neck if I could
say that. You know, most of that's been passed on
through our customers and consumers in those markets. So I
think the US economy will feel the pain, you know,
fifteen percent and start to get away from from being
on par with others. That for us, as you start
(05:05):
to get a bit, we get a bit grumpy at
that level. But you know that said, you know where
we can closely with our customers up there, they understand it.
It's more of a political issue on their side more
than more than us. But you know, I see minister
mcclay's up there. Let's see if he can rattle a
few cages. But you know, we're diversified enough. We'll go
where we get the best return. And if that means
the US slows down a little bit for us and
(05:26):
we pope the products to other markets, that's what we've
got at.
Speaker 1 (05:29):
Okay, Just finally, the other number that came out yesterday
was the earnings guidance remained unchanged. It's sixty five to
seventy five cents per share potentially. I mean, I I
just threw it out there. Could there be a fifty
cent dividend for fonterra'sh A Farmer shareholders this year, along
with their two bucks per share.
Speaker 2 (05:48):
Yeah, well who knows. So twenty third or twenty fourth
of September, I think is today we go to the
board for that. So we'll do the numbers. I mean,
the balance sheets in a really strong position even even
the side of this announcement today the earnings looked look
look strong as you say, and the gardens of sixty
five to seventy five cents. So you know, it's a
good time to be a to be a shiolder and
(06:10):
you have to wait till the ends of tema.
Speaker 1 (06:11):
Jamie Miles Cyril, thank you very much for your time.
I appreciate you're a busy man.
This man is full of good news. He is the
chief executive of Fonterra, our biggest farming company and co operative.
Miles Hurrele, you've agreed to sell your consumer and associated
businesses to lack Talis for three point eight four or
five billion dollars? Is this going to get universal farmer support?
Do you reckon?
Speaker 2 (00:20):
Miles Jamie Well, I mean the headline number you talk to,
it's a pretty good result. Team have been working around
the clock on this for a number of months now,
so I know we're act. We'll take it to our
farm at the end of October. They ultimately make their
own calls, but you know, the fact we're out there
talking about giving two dollars a yearback, you know, three
point two billion dollars of that three point eight I
(00:41):
think that she gets some pretty good support from our farmer.
Speaker 1 (00:43):
You're dangling a very big carrot in front of the
dairy farmers there, Miles Well, I.
Speaker 2 (00:47):
Wouldn't call it a carrot. I mean, ultimately, it's their capital,
so we just think let's do the right thing with it.
From their perspective, they've invested in this business for a
number of years and you know, as we've talked about
it and given the return over the long team that
we want that consumer business, so the right thing to
do is to give it back.
Speaker 1 (01:05):
Is there an argument, and we had a text earlier
in the shows suggesting it might make dairy products more
expensive for New Zealand consumers. Any logic to that argument?
Speaker 2 (01:15):
Hard to see that logic to be fair. I mean,
the competed environment doesn't change, you know, effectually removing us
from the consumer market and put in another player. So
I wouldn't see that changing at all. If anything, you'd
see someone like Luck the least that could potentially bring
in some other international brands that they own into the
New diital market that they may see an opportunity for.
So I wouldn't see any change in the New Zealand
(01:38):
competitive environment internationally, you know. I think it's a great
new story that they'll grow. I think they'll take to
another level that we haven't been able to do internally,
and as a result, we'll be supplying the additional ingredients
and fresh milk to support big growth.
Speaker 1 (01:50):
Yeah, well that's sort of the key part of the agreement.
I guess the fact that you've locked in the supply
from the Fonterra farmer.
Speaker 2 (01:56):
Shareholders exactly that, and that was a key part, not
not just for our own farmers, shy holders because they
want to see their milk go into those brands. You
know that that was an important conversation with people with
them for quite some time. But at the same time
it was critical for lack deletion of the conversations we've
had with them. They understand the importance of the brands
and the strength of those brands. They understand that the
(02:17):
manufacturing factories that they're buying, but at the same time
they also know they're worthless. I haven't got raw material
to go through it, and the good stuff that their
farmers do is critical to that. So no, that's a
great one one for everyone. I think of this one.
Speaker 1 (02:31):
How long does that supply agreement last?
Speaker 2 (02:33):
For well, they vary as easy to appreciate. You know,
there's fresh milk at one of the spectrum, which goes
into a sort of an anchor two leader, and then
there's a whole lot of ingredients that might go into
some specially specialty products. So they vary across the board.
You know, the fresh milk want to give you an
idea of sort of ten years a minimum starting points,
so that you give a good indication to our shoeholders
that we were.
Speaker 1 (02:53):
At what's the process from here on in to get
this rubber stamped or in?
Speaker 2 (02:58):
Yeah, so thirty towards the end of oct I think
thirty October. We're looking at this point of a farmer vote.
There will be we've got our annual results coming out
towards end the September. We'll go through and our conversations
with farmers through that period towards the end of October.
For that vote, there's obviously regulatory approvals that are required.
So with that, you know competition tribunals internationally, with it
(03:19):
be in Australia not here in New Zealand from that perspective.
And then there's the sort of OO equivalents. They exist
both here Australia, I think, Saudi and Kuwait have got
a couple of others. So those are formal process we
need to go through. At the end of the day,
we don't see any major hicckups with that. That's just
a time process, we believe. So hopefully by the midway
(03:41):
through Canada twenty six will be able to close us out.
Speaker 1 (03:45):
Yesterday, you came out and announced ten dollars fifteen. That's
the new midpoint, and you have narrowed it right down,
so that's we can probably call that locked and loaded
for twenty four, twenty five, perhaps more interestingly, twenty five
twenty six ten dollars. It's pretty rock solid at the moment.
Speaker 2 (04:01):
Is it well as good? And as you remember, we
moved away from that midpoint for the current season, which
which really reflecting we saw more downside risk on the
back of the introduction of tariffs in the US and
the sort of global uncertainty. We've knocked the bottom of
that range off now, which you know, we've kept the
ten dollars there as our position, but we've taken that
low end off because we have we've had confidence in
(04:23):
the early part of our season. Milk is starting to
flow now, so we obviously need to see a little
bit more of that soul before we have any confidence
in doing anything further. But the last two or three
GDT events gives a pretty good indication that it's pretty
solid out there.
Speaker 1 (04:37):
You mentioned the tariffs. How's Trump treating you.
Speaker 2 (04:43):
Well, I mean, look, it's not helpful we can say that.
I mean, you know, ten percent was disruptive and a
bit of a pain in the neck if I could
say that. You know, most of that's been passed on
through our customers and consumers in those markets. So I
think the US economy will feel the pain, you know,
fifteen percent and start to get away from from being
on par with others. That for us, as you start
(05:05):
to get a bit, we get a bit grumpy at
that level. But you know that said, you know where
we can closely with our customers up there, they understand it.
It's more of a political issue on their side more
than more than us. But you know, I see minister
mcclay's up there. Let's see if he can rattle a
few cages. But you know, we're diversified enough. We'll go
where we get the best return. And if that means
the US slows down a little bit for us and
(05:26):
we pope the products to other markets, that's what we've
got at.
Speaker 1 (05:29):
Okay, Just finally, the other number that came out yesterday
was the earnings guidance remained unchanged. It's sixty five to
seventy five cents per share potentially. I mean, I I
just threw it out there. Could there be a fifty
cent dividend for fonterra'sh A Farmer shareholders this year, along
with their two bucks per share.
Speaker 2 (05:48):
Yeah, well who knows. So twenty third or twenty fourth
of September, I think is today we go to the
board for that. So we'll do the numbers. I mean,
the balance sheets in a really strong position even even
the side of this announcement today the earnings looked look
look strong as you say, and the gardens of sixty
five to seventy five cents. So you know, it's a
good time to be a to be a shiolder and
(06:10):
you have to wait till the ends of tema.
Speaker 1 (06:11):
Jamie Miles Cyril, thank you very much for your time.
I appreciate you're a busy man.
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