Fonterra has delivered a strong interim result for the 2025 fiscal year.
It's reported a half year Profit after Tax of $729 million, with earnings of 44 cents per share.
It's alongside a Farmgate Milk Price midpoint of $10 per kilograms of milk solids for the season ending 2025.
CEO Miles Hurrell says it’s pleasing to be able to deliver these results for farmer shareholders and unit holders.
Dairy Insights Consultant Stu Davison told Mike Hosking the entire industry is fizzing.
He says it’s a pretty uncommon result to see a strong milk price and a strong dividend in the same season, and they’re going to ride the wave while they’ve got it.
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Episode Transcript
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Speaker 1 (00:00):
Can you handle buckle up? Can you have even more
good news? The farming That is the story of the
year as far as I can work out, So Fonterra
coming to the party with an eight percent lift in
its first half net profit dividends of twenty two cents
per share, and that midpoint at the farm gate, of course,
is sitting around ten bucks. Dairy Insights consultant Steve Davison's
with us on this stut morning.
Speaker 2 (00:19):
Good morning, Mike, how are you well?
Speaker 1 (00:21):
You're fizzing well, mate, I.
Speaker 2 (00:23):
Am fizzing and I think the entire industry is to
be honest, you know, it's a pretty uncommon results. See
strong milk rice and a strong dividend in the same.
Speaker 1 (00:31):
Season, exactly, And we've got a forecast for the same
next year, which is highly unusual.
Speaker 2 (00:36):
Yeah, exactly, Yeah, back and back. Good milk for rices
is not very common. We've send them in the futures markets.
How long it lasts up the question, but you know,
right the way, while we've got.
Speaker 1 (00:45):
It, exactly, the money, just to put it into perspective
for people who don't follow the rural economy, this is
billions and it goes into the economy. It goes into
small town New Zealand, which goes into the whole economy.
A country this size cannot help but be affected by
billions of dollars from the farming community, can it.
Speaker 2 (01:03):
No, You're exactly right, and that's you know, that's what
they say. Fifty cents of every dollar of the power
gets spent in communities, royal communities, all the New Zealand economy.
So New Zealand again rides the wave of the dairy
industry and the export channels that this opens up and
earns from the world is pretty impressive.
Speaker 1 (01:19):
And this result aspects that without sucking up to him
too much, because he's on the program again next week,
how much of this do you put down to Hurrale?
I mean, he seems if you go back to the
Spearing years, to the Hurrale years, this is a completely
different story. Is it him or is it just luck?
Speaker 2 (01:35):
I think it's him, but I think it's also the
whole team too. Like you know, to your point about
not stick up to Miles, he's done. He has done
very well. But and he'll say so himself that the
whole team is pointing in the same direction too, which
is pretty cool, you know, that there's some really interesting
insights coming out of the co op and they really
understand where they went wrong in the past, and they
really understand what they need to do right to keep
the sort of performance going forward into the future. Not
(01:58):
to mention, you know, keep their play in New Zealand
is the largest co op as well. You know, they've
got competition from alternative processes in New Zealander. Farmers can
can and are making the choices to change and so
that's really important when they think about their results in
milk prices, you know, to stop that EBB and flow
of milks leaving the cop.
Speaker 1 (02:15):
Which brings me to my current conundrum, which if he
knows what he's doing, then I shouldn't be arguing against him.
But I think this consumer thing he's looking at the
IPO of the trade sale, I think is a mistake.
Do you have a view on that?
Speaker 2 (02:27):
Yeah, I would have thought the same about a year
ago too, And having talked to the team at Fonterra
about the same topic over the last year, I kind
of see their point around why the viewers to remove it.
It does continue to earn the less in terms of
return on capital. It is a bit of a complicated
arm of the co op and having the power to
say you know what, actually we're maybe not the best
(02:49):
I think is a pretty brave call. But it kind
of makes sense at the same time when there are
so good at ingredients and food service. You know, New
Zealand is a commodity and large process, it makes sense
let someone else take the brunt of it.
Speaker 1 (03:02):
So you've changed your mind, you think so, And I
I mean the trade sales didn't do an IPO and
IPO would be quite good for the market apart from
anything else. Would you ipo it or trade sale?
Speaker 2 (03:11):
In my opinion on IPO and there's a reason for
that too. I think the big emotional attachment for kiwis
and farmers around the mainland and the brands and whatnot.
An IPO will attract a lot of attention from New
Zealanders and right across the spectrum. And obviously it gives
the chance for current shyholders of Fonterra to use the
capital their return from that consumer sales to go and
(03:32):
invest in that IPO. So if you want to be
in there you can, and if not, then do something
on your own farm with your own capital. But I
think it's a big opportunity for New Zealand to grow.
And if Fonterra can get the milk supply agreements they've
talked about with these consumer businesses, that's a big win
for them as well. But I think a lot of
that all. The other side of that consumer business conversation
(03:53):
is that, you know, we don't see a lot of
the businesses in the world that are under the consumer headline.
In Sri Lanka, Australia. You asked the average farmer in
New zeal And, they wouldn't realize how much milk Fonterra
collected and processed in Australia or Shri Lanka, for example.
Speaker 1 (04:06):
No good point. Do you follow the IF one or
the Warriors?
Speaker 2 (04:10):
IF one? Love IF one, so you'll.
Speaker 1 (04:11):
Be watching the IF one tonight over the Warriors.
Speaker 2 (04:15):
I mean, I'd love to say I've got both on
the screen, but it'll probably the Chinese GP first.
Speaker 1 (04:19):
Yeah, okay, all right, it'stu nice to talk to you.
Appreciate it very much. I apparently I've got a television
that can split screens. Sam tells me this. I don't
know how to do that, but tonight it's going to
be the night I'm going to have to look at
doing that, so that's my problem. I just wanted to
share that with Stu there for a moment. Steve Davison,
I like his style. Diary Insights consultant. For more from
the Mic Asking Breakfast, listen live to news talks.
Speaker 2 (04:38):
It'd be from six am weekdays, or follow the podcast
on iHeartRadio.
Can you handle buckle up? Can you have even more
good news? The farming That is the story of the
year as far as I can work out, So Fonterra
coming to the party with an eight percent lift in
its first half net profit dividends of twenty two cents
per share, and that midpoint at the farm gate, of course,
is sitting around ten bucks. Dairy Insights consultant Steve Davison's
with us on this stut morning.
Speaker 2 (00:19):
Good morning, Mike, how are you well?
Speaker 1 (00:21):
You're fizzing well, mate, I.
Speaker 2 (00:23):
Am fizzing and I think the entire industry is to
be honest, you know, it's a pretty uncommon results. See
strong milk rice and a strong dividend in the same.
Speaker 1 (00:31):
Season, exactly, And we've got a forecast for the same
next year, which is highly unusual.
Speaker 2 (00:36):
Yeah, exactly, Yeah, back and back. Good milk for rices
is not very common. We've send them in the futures markets.
How long it lasts up the question, but you know,
right the way, while we've got.
Speaker 1 (00:45):
It, exactly, the money, just to put it into perspective
for people who don't follow the rural economy, this is
billions and it goes into the economy. It goes into
small town New Zealand, which goes into the whole economy.
A country this size cannot help but be affected by
billions of dollars from the farming community, can it.
Speaker 2 (01:03):
No, You're exactly right, and that's you know, that's what
they say. Fifty cents of every dollar of the power
gets spent in communities, royal communities, all the New Zealand economy.
So New Zealand again rides the wave of the dairy
industry and the export channels that this opens up and
earns from the world is pretty impressive.
Speaker 1 (01:19):
And this result aspects that without sucking up to him
too much, because he's on the program again next week,
how much of this do you put down to Hurrale?
I mean, he seems if you go back to the
Spearing years, to the Hurrale years, this is a completely
different story. Is it him or is it just luck?
Speaker 2 (01:35):
I think it's him, but I think it's also the
whole team too. Like you know, to your point about
not stick up to Miles, he's done. He has done
very well. But and he'll say so himself that the
whole team is pointing in the same direction too, which
is pretty cool, you know, that there's some really interesting
insights coming out of the co op and they really
understand where they went wrong in the past, and they
really understand what they need to do right to keep
the sort of performance going forward into the future. Not
(01:58):
to mention, you know, keep their play in New Zealand
is the largest co op as well. You know, they've
got competition from alternative processes in New Zealander. Farmers can
can and are making the choices to change and so
that's really important when they think about their results in
milk prices, you know, to stop that EBB and flow
of milks leaving the cop.
Speaker 1 (02:15):
Which brings me to my current conundrum, which if he
knows what he's doing, then I shouldn't be arguing against him.
But I think this consumer thing he's looking at the
IPO of the trade sale, I think is a mistake.
Do you have a view on that?
Speaker 2 (02:27):
Yeah, I would have thought the same about a year
ago too, And having talked to the team at Fonterra
about the same topic over the last year, I kind
of see their point around why the viewers to remove it.
It does continue to earn the less in terms of
return on capital. It is a bit of a complicated
arm of the co op and having the power to
say you know what, actually we're maybe not the best
(02:49):
I think is a pretty brave call. But it kind
of makes sense at the same time when there are
so good at ingredients and food service. You know, New
Zealand is a commodity and large process, it makes sense
let someone else take the brunt of it.
Speaker 1 (03:02):
So you've changed your mind, you think so, And I
I mean the trade sales didn't do an IPO and
IPO would be quite good for the market apart from
anything else. Would you ipo it or trade sale?
Speaker 2 (03:11):
In my opinion on IPO and there's a reason for
that too. I think the big emotional attachment for kiwis
and farmers around the mainland and the brands and whatnot.
An IPO will attract a lot of attention from New
Zealanders and right across the spectrum. And obviously it gives
the chance for current shyholders of Fonterra to use the
capital their return from that consumer sales to go and
(03:32):
invest in that IPO. So if you want to be
in there you can, and if not, then do something
on your own farm with your own capital. But I
think it's a big opportunity for New Zealand to grow.
And if Fonterra can get the milk supply agreements they've
talked about with these consumer businesses, that's a big win
for them as well. But I think a lot of
that all. The other side of that consumer business conversation
(03:53):
is that, you know, we don't see a lot of
the businesses in the world that are under the consumer headline.
In Sri Lanka, Australia. You asked the average farmer in
New zeal And, they wouldn't realize how much milk Fonterra
collected and processed in Australia or Shri Lanka, for example.
Speaker 1 (04:06):
No good point. Do you follow the IF one or
the Warriors?
Speaker 2 (04:10):
IF one? Love IF one, so you'll.
Speaker 1 (04:11):
Be watching the IF one tonight over the Warriors.
Speaker 2 (04:15):
I mean, I'd love to say I've got both on
the screen, but it'll probably the Chinese GP first.
Speaker 1 (04:19):
Yeah, okay, all right, it'stu nice to talk to you.
Appreciate it very much. I apparently I've got a television
that can split screens. Sam tells me this. I don't
know how to do that, but tonight it's going to
be the night I'm going to have to look at
doing that, so that's my problem. I just wanted to
share that with Stu there for a moment. Steve Davison,
I like his style. Diary Insights consultant. For more from
the Mic Asking Breakfast, listen live to news talks.
Speaker 2 (04:38):
It'd be from six am weekdays, or follow the podcast
on iHeartRadio.
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