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 (00:00):
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 Hrrell is
Fontera's chief executive with me tonight, Miles, good evening, good
edning run. How did you feel about that result? Oh?
Speaker 2 (00:22):
Superb result. Our team have got up and delivered and
you know, please to be able to stand it there
this morning and talk to a farmers and deliver a
decent milk price but also decent earnings on top. So no,
overall superb result for the team.
Speaker 1 (00:33):
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 2 (00:39):
Yeah, So to finish the year ten sixteen ten dotals
sixteen per kilogram for the last season, and the forecast
the head still remains ten dollars a second ye in
a row forecast of ten dollars, which is 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 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
(01:01):
in a row.
Speaker 1 (01:01):
When you say uncertainty, do you mean supply stuff or
trade stuff or both.
Speaker 2 (01:07):
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
(01:28):
think at a good ten dollars.
Speaker 1 (01:29):
Again, locally, the price of bus 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 2 (01:41):
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 wholesale Barta 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 there in prices, but that should flow through and
(02:01):
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
that flows through to the markets.
Speaker 1 (02:13):
Why the delay for it to flow through, Well.
Speaker 2 (02:17):
Well, I mean depends on what sort of contracts each
of these supermarkets will have, who they're brought from, over
what periods we'll 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 they say, the wholesale price has come down steadily
(02:37):
in the lasts of a month or two, and I
expect that to flow through to at some point.
Speaker 1 (02:42):
Roughly north of four billion for the sale of their
consumer business and three billion going to shareholders, the remainder
being reinvested into what well.
Speaker 2 (02:53):
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
and including 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
(03:15):
in a cooperative 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 1 (03:28):
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 2 (03:42):
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,
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, the innovation cycle
is quite fast in China. You've got to continue to
find new products in new markets and new customers, which
(04:04):
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 it certainly not back to where it was in
twenty twenty three. But we're in a pretty good position.
Speaker 1 (04:19):
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.
Speaker 2 (04:32):
What do you say, Well, look, it's running it's running
a heck a lot better than where it's been in
the history of the CORPET. I'd go as far as
to say that set that still doesn't in our minds
get to the cost of capital that our farmers have invested.
And so you know, when you're operating in a finite
resource environment, whether that be cash or others, you've got
to put your farmer's capital things that we're going to
(04:52):
get the best return and consumers still is the lag
out of that. So the economics of it, I think
are quite clear. I think you get to the emotional
element from our farmers that are their brands that they've
invested in, and we all understand them. But at the
end of the day, I've got to look through that
and say what's the right thing to do for the
cop well in to the next generation or two. I
will take that to farmers at the end of October
(05:12):
for a vote. We're we're out on farm next week
talking to a range of farmers to 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 1 (05:23):
All right, Myles, appreciate your time tonight Miles Han and
congratulations on the result Miles Harold, chief executive at Vounteering.
For more from Heather Duplessy Alan Drive, Listen live to
news Talks the'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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 Hrrell is
Fontera's chief executive with me tonight, Miles, good evening, good
edning run. How did you feel about that result? Oh?
Speaker 2 (00:22):
Superb result. Our team have got up and delivered and
you know, please to be able to stand it there
this morning and talk to a farmers and deliver a
decent milk price but also decent earnings on top. So no,
overall superb result for the team.
Speaker 1 (00:33):
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 2 (00:39):
Yeah, So to finish the year ten sixteen ten dotals
sixteen per kilogram for the last season, and the forecast
the head still remains ten dollars a second ye in
a row forecast of ten dollars, which is 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 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
(01:01):
in a row.
Speaker 1 (01:01):
When you say uncertainty, do you mean supply stuff or
trade stuff or both.
Speaker 2 (01:07):
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
(01:28):
think at a good ten dollars.
Speaker 1 (01:29):
Again, locally, the price of bus 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 2 (01:41):
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 wholesale Barta 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 there in prices, but that should flow through and
(02:01):
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
that flows through to the markets.
Speaker 1 (02:13):
Why the delay for it to flow through, Well.
Speaker 2 (02:17):
Well, I mean depends on what sort of contracts each
of these supermarkets will have, who they're brought from, over
what periods we'll 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 they say, the wholesale price has come down steadily
(02:37):
in the lasts of a month or two, and I
expect that to flow through to at some point.
Speaker 1 (02:42):
Roughly north of four billion for the sale of their
consumer business and three billion going to shareholders, the remainder
being reinvested into what well.
Speaker 2 (02:53):
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
and including 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
(03:15):
in a cooperative 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 1 (03:28):
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 2 (03:42):
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,
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, the innovation cycle
is quite fast in China. You've got to continue to
find new products in new markets and new customers, which
(04:04):
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 it certainly not back to where it was in
twenty twenty three. But we're in a pretty good position.
Speaker 1 (04:19):
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.
Speaker 2 (04:32):
What do you say, Well, look, it's running it's running
a heck a lot better than where it's been in
the history of the CORPET. I'd go as far as
to say that set that still doesn't in our minds
get to the cost of capital that our farmers have invested.
And so you know, when you're operating in a finite
resource environment, whether that be cash or others, you've got
to put your farmer's capital things that we're going to
(04:52):
get the best return and consumers still is the lag
out of that. So the economics of it, I think
are quite clear. I think you get to the emotional
element from our farmers that are their brands that they've
invested in, and we all understand them. But at the
end of the day, I've got to look through that
and say what's the right thing to do for the
cop well in to the next generation or two. I
will take that to farmers at the end of October
(05:12):
for a vote. We're we're out on farm next week
talking to a range of farmers to 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 1 (05:23):
All right, Myles, appreciate your time tonight Miles Han and
congratulations on the result Miles Harold, chief executive at Vounteering.
For more from Heather Duplessy Alan Drive, Listen live to
news Talks the'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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