Miles Hurrell: Fonterra Chief Executive on 8% net profit rise, and the hope for dairy to be included in India’s FTA

It’s good news for diary giant Fonterra, whose first half net profit is up 8 percent to $729 million, with a revenue growth of 14 percent.

A dividend of 22 cents a share will be paid, and the forecast farmgate milkprice is sitting at a midpoint of $10 a kilo.

What is the message to farmers?

Fonterra Chief Executive Miles Hurrell talks to Tim Beveridge about the result.

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Episode Transcript

Speaker 1 (00:00):
Dairy giant Fonterra has delivered a cracker result. Net profit
was up eight percent in its first half result to
seven hundred and twenty nine million dollars, a dividend of
twenty two cents a shell be paid, and the forecast
farmgate milk price is sitting at a midpoint of ten
dollars per kilo. Myles Harrel is Fonterra's chief executive. Good afternoon,

(00:22):
Good afternoon, Tim, Nice to celebrate some good news.

Speaker 2 (00:26):
Yeah, look, we're really pleased. Are she put out this
half ye result up on the pri yea and across
all our three sort of key channels performing pretty well.
So no, we are. We are pleased to put out
this result. Given things to sort of bubbling along a
little bit in New Zealand context.

Speaker 1 (00:40):
What's driving that strong performance?

Speaker 2 (00:44):
Well, I think it's sort of a macro level, you know,
good strong demand for good, healthy product made here in
New Zealand. I think is probably the way I describe
it at a high level. But you know, boots on
the ground and some of our key markets, you know,
pushing the great news story of how we farm here
in New Zealand, that the benefits of dairy the benefits
of protein. You know, it's all all wrapped up in

(01:07):
that same sort of story around what we do here
in New Zealand.

Speaker 1 (01:10):
So the forecast at a record high. What's your message
to farmers on what to do with such good news
and the money that's going to flow in.

Speaker 2 (01:18):
Well, clearly farmers will make their own calls. But we
have come off the back if we remember off a
couple of sort of tough years where you know, costs
on farm of a sort of skyrocket. Go back to
eighty months or so, that inflatory pressure that we saw
in New Zealand was exacerbated in rural and rural land landscape.
So you know they're going to need some some decent
pays to sort of catch up a little bit from

(01:40):
where they've come from. So they'll see it as a positive.
But at the same time that these are you know,
it's a long term game. They'll be looking through the
sort of the short term thinking, you know, it's the
cyclical business, so we need to watch it into the
long term. There's some political clouds on the horizon that
may come out away or may not. So you know
that they're smart business people on their own right and

(02:00):
so they'll they'll they'll take this with open arms and
be thankful, I'm sure. But at the same time they'll
be looking forward to the next few years.

Speaker 1 (02:08):
But beyond here now, I always feel as a risky
game doing the predictions, doesn't it. Darien New Zealand's reported
this week they reckon next you will be another record season.
Are you as optimistic.

Speaker 2 (02:18):
Well off our city today? You know, thing the supply
demand position that we see internationally does look in a
pretty good position. We've seen the rearmusements of China after
again a flowish start last year, so all of those
things sort of point in the right direction. But as
I refer you know, some of those clouds on the
horizon from a geopolitics perspective, you know the macrek and
I'm not positioned then they're not that bright. And so

(02:39):
if one or two or three of those that have
come to the into play, you could push things back
a little bit. But as a city today, you know,
I think things are healthy and I saw that number
from Darien zed and farmers should be see some confidence
in that. But where we will be another couple of
months away, I guess Before we put out our own
forecast for next year, which lock can happen in a
couple of months.

Speaker 1 (02:58):
Yeah, of course, try and tariffs. Do you sort of
try and model predictions on what could happen and how
much it might impact your business.

Speaker 2 (03:07):
Yeah, we do, well, we sort of run a few scenarios.
In all scenarios. You know, when you put sort of
tariffs on on business around the world, it's not a
great outcome at the highest level, you know. That said,
we've pride ourselves as an organization for the last one
hundred and fifty years on sort of navigating tricky parts
of business, and so you know, we'd like to see

(03:27):
that we can see our way through that. We've done
it for the last six or twelve months when things
haven't been so easy. So you know, I like them
we can see our way through that because.

Speaker 1 (03:35):
You'd be watching developments in India closely. Dairy and India
seem to be the two words that don't go together
too well. Are you optimistic about the noises you're hearing
about a trade deal?

Speaker 2 (03:48):
Well, well, very pleasing to see that that therey is
included in the negotiations, because I guess it was the
first hurdle to overcome and so so please to see
Prime Minister and this team have done that. We recognize
that there's going to be a tough conversation that needs
to be had, but you know, they've got a growing
middle class. They're going to need more fat, more protein
into their diets at a time I don't think that
the Indian dairy industry can keep up with that. And

(04:11):
so you know, we're not looking to be in there
as a wholesale player. We're looking to support them in
their own industry goals. So you know, i'd like to
think that that those conversations are rational at the right time.
But we're here confident at this point.

Speaker 1 (04:24):
Great and just quickly, where are things at with the
sale of your consumer brands?

Speaker 2 (04:28):
Yeah, so we're going hard on the dual track, and
by that we mean looking at it at a trade sale.
And so we're in discussions now with some Intersted adviyers
that are starting to put their bids forward and at
the same time running the I p O process. So
the road shows are underway and I think the team
are in Australia this week, in an Asia next talking
to the market and so we should have some clarity

(04:50):
within a couple of months or to which way we go,
but well advanced and results that we've put out today
go a long way to sort of, you know, supporting
and cementing that it's a great business that we have there.

Speaker 1 (05:01):
Hey, Miles, thanks so much for your time. That is
Males Harald, chief executive of von Terra. For more from
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