Co-op on the home straight

He told about 180 farmers at the co-op’s annual meeting in Masterton last week that it was now “on the home straight”.

“We’ve got momentum and 2021 is going to build on that,” he says.

“We won’t forget the lessons learnt from our past, but you will see us shift our focus to the future.”

This is reflected in its three priority areas: Cooperative, Performance and Community.

Hurrell says the co-op is off to a good start.

“We already have some good runs on the board.”

Hurrell highlighted three numbers for shareholders.

The first was the improved gross profit – up $200 million to $3.2 billion. Key drivers of this were the Ingredients business, which did benefit from a softening milk price in the second half of the year.

Hurrell says the other key driver was its Greater China Foodservice business in the first half, prior to the emergence of Covid-19.

He also highlighted the 24 cents per share earnings— at the top end of its guidance range of 15-25 cents. The final number he highlighted was the $1.1 billion debt reduction.

“One of the questions I’ve been asked a few times over the last couple of months is, ‘what is the key number in this year’s annual results?’ Putting aside the $7.14/kgMS and what this also means for the country, it’s this $1.1 billion reduction in debt that I keep coming back to.”

Growth days over

Fonterra chief executive Miles Hurrell says the days of significant milk growth are over for the co-operative.

He told Fonterra’s annual meeting in Masterton last week that some people may see this as a downside.

“The good thing is it means your milk will become a scarce resource in the global markets – a valuable, scarce resource.”

 To grow demand and add further value, Fonterra is differentiating farmer milk through its strengths: sustainability, innovation and scale efficiency.“By being closer to our customers than we have been in the past, we’ll make sure the New Zealand-ness of your milk is being understood and valued more. 

“We’re clear about the consumption categories we want to be in – Core Dairy – that’s both base and advanced ingredients, foodservice, sports and active lifestyles, medical and aging nutrition, and paediatrics.”