Fonterra Shareholders (FSF) H2 2024 earnings summary

Executive summary

• Net earnings per share reached NZD 0.70, at the top end of guidance, reflecting strong performance despite market volatility and geopolitical uncertainty.

• Profit after tax was $1.17 billion, down from $1.24 billion year-over-year.

• Total dividend for the year was NZD 0.55 per share, including a special dividend of NZD 0.15, supported by a strong balance sheet and higher earnings.

• Return on capital was 11.3%, exceeding the FY 2024 target range of 8%-9%.

• Total Shareholder Return for the past 12 months was 94.6%, outperforming the S&P NZX50 Index.

Financial highlights

• Operating earnings decreased by NZD 195 million, with lower impairments offsetting a larger underlying decline.

• Revenue declined due to lower product prices and a 1% drop in volumes, but sales mix shifted toward higher-margin Foodservice and consumer channels.

• Gearing ratio improved to 24.0%, down from 28.8%.

• Total payout per share was $8.38, down from $8.72.

• Net debt reduced by NZD 600 million year-over-year, from NZD 3.2 billion to NZD 2.6 billion.

Outlook and guidance

• FY 2025 forecast net earnings per share set at NZD 0.40–0.60, with expectations of similar underlying performance and strong margins.

• 2024/25 forecast Farmgate Milk Price is $9–$10 per kgMS.

• Targeting a significant capital return if the Consumer business is divested.

• Higher tax expense anticipated as tax losses are exhausted, resulting in the generation of imputation credits for shareholders.