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Speaker 1: Regions will get a double whammy boost with this Fonterra

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Speaker 1: result net profit up over a billion dollars. Shareholders will

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Speaker 1: get their highest ever total dividend of fifty seven cents

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Speaker 1: a share for the year, which is great. Add to

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Speaker 1: that the consumer brand sale three out of the four

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Speaker 1: billion of that is going back to Miles Hrrell is

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Speaker 1: Fontera's chief executive with me tonight, Miles, good evening, good

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Speaker 1: edning run. How did you feel about that result? Oh?

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Speaker 2: Superb result. Our team have got up and delivered and

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Speaker 2: you know, please to be able to stand it there

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Speaker 2: this morning and talk to a farmers and deliver a

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Speaker 2: decent milk price but also decent earnings on top. So no,

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Speaker 2: overall superb result for the team.

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Speaker 1: What are you expecting in the year ahead. I mean,

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Speaker 1: obviously it's been a great year dairy price wise. What

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Speaker 1: are you expecting going forward?

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Speaker 2: Yeah, So to finish the year ten sixteen ten dotals

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Speaker 2: sixteen per kilogram for the last season, and the forecast

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Speaker 2: the head still remains ten dollars a second ye in

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Speaker 2: a row forecast of ten dollars, which is we've never

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Speaker 2: been done before. Of course, still a bit of uncertainty

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Speaker 2: out there in the international market, and we're only in

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Speaker 2: the early early stages, so a lot of the water

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Speaker 2: to go unto the bridge. But as we see here today,

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Speaker 2: feel pretty good about ten dollars for the second year

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Speaker 2: in a row.

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Speaker 1: When you say uncertainty, do you mean supply stuff or

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Speaker 1: trade stuff or both.

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Speaker 2: Mainly trade geopolitics. It just it just puts a bit

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Speaker 2: of uncertainty in the minds of buyers, whether they be

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Speaker 2: in the US or throughout Asia. It just puts unsettledness

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Speaker 2: into the market. And so you know, to buyers sit

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Speaker 2: around and wait a little bit, and does that soften

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Speaker 2: the market? But you know, at the same time, you

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Speaker 2: know we've got a good product to sell and the

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Speaker 2: customs of wanting it, so those things balance out I

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Speaker 2: think at a good ten dollars.

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Speaker 1: Again, locally, the price of bus is obviously being very

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Speaker 1: big on the minds of consumers. Is it frustrating for

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Speaker 1: you to hear that debate and to hear the reaction

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Speaker 1: from some of our politicians.

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Speaker 2: Well, I think we should acknowledge. I mean, it has

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Speaker 2: been tough out there for consumers. In the price of

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Speaker 2: dairy products has risen in the last twelve eighty months

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Speaker 2: caught quite significantly, so we should acknowledge that it has

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Speaker 2: been tough. You know, that said, the wholesale Barta price

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Speaker 2: has probably come off about fifteen percent actually in the

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Speaker 2: last two months, so you know, at some point that

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Speaker 2: will flow through to the supermarkets. I suspect that they'll

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Speaker 2: set there in prices, but that should flow through and

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Speaker 2: give an element of relief. But you know, at the

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Speaker 2: end of the day, as we've said previously, you know,

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Speaker 2: the international market has been quite buoyant, which which delivers

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Speaker 2: these returns are back to New Zealand and unfortunately that

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Speaker 2: that flows through to the markets.

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Speaker 1: Why the delay for it to flow through, Well.

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Speaker 2: Well, I mean depends on what sort of contracts each

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Speaker 2: of these supermarkets will have, who they're brought from, over

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Speaker 2: what periods we'll be quarterly contracts or spot pricing. So

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Speaker 2: you know, there might be some inventory in the system,

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Speaker 2: and when you go to the supermarket it's there's stock

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Speaker 2: there that didn't arrive this morning. It might have been

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Speaker 2: there for us for a few weeks, and so those

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Speaker 2: things take some time to flow through. But you know,

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Speaker 2: as they say, the wholesale price has come down steadily

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Speaker 2: in the lasts of a month or two, and I

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Speaker 2: expect that to flow through to at some point.

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Speaker 1: Roughly north of four billion for the sale of their

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Speaker 1: consumer business and three billion going to shareholders, the remainder

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Speaker 1: being reinvested into what well.

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Speaker 2: So we have a range of things that we're looking at.

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Speaker 2: So we haven't made any calls on that other than

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Speaker 2: we've already got a pipeline of growth projects out there

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Speaker 2: and including additional butter capacity we are putting into the

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Speaker 2: South Island at some point next year. So the range

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Speaker 2: of sort of growth projects predominantly for the export market again,

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Speaker 2: so some of it will go towards that. We also

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Speaker 2: want to keep a conservative balance sheet and it's important

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Speaker 2: in a cooperative position, and we're dealing an international market

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Speaker 2: to maintain a conservative balance sheet. So a combination of

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Speaker 2: those things. But at the same time, you know, we

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Speaker 2: are in a really good position. It gives us opportunity

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Speaker 2: to explore other alternatives as they come up.

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Speaker 1: China, how are you feeling about it? They are obviously

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Speaker 1: a government they're trying to stoke consumer demand. It has

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Speaker 1: been relatively strong for us. How significant is that now

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Speaker 1: in terms of the business and how significant will it

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Speaker 1: be going forward.

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Speaker 2: Yeah, look, it's still a third of our book, maybe

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Speaker 2: even slightly more than a third of our book. And

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Speaker 2: we have been strong, robust demand in the last twelve months. Yeah,

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Speaker 2: has come off from where it was two or three

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Speaker 2: years ago, and I think we've talked about that. But

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Speaker 2: at the same time, we are still seeing strong demand.

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Speaker 2: But at the same time, you know, the innovation cycle

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Speaker 2: is quite fast in China. You've got to continue to

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Speaker 2: find new products in new markets and new customers, which

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Speaker 2: our team in the markets do so feeling good about that.

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Speaker 2: I think they've you know, they've seen the GDP growth

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Speaker 2: actually start to increase again from the slumps they had

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Speaker 2: a year ago, and so we'll ride the wave of that.

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Speaker 2: But it certainly not back to where it was in

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Speaker 2: twenty twenty three. But we're in a pretty good position.

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Speaker 1: I've had text in the show this afternoon miles from

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Speaker 1: farmers from your suppliers saying we think it's crazy to

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Speaker 1: sell off and it's not. You know, there is a

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Speaker 1: range of views, but some saying it's crazy to sell

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Speaker 1: off part of the company now that it's running well

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Speaker 1: value add et cetera.

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Speaker 2: What do you say, Well, look, it's running it's running

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Speaker 2: a heck a lot better than where it's been in

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Speaker 2: the history of the CORPET. I'd go as far as

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Speaker 2: to say that set that still doesn't in our minds

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Speaker 2: get to the cost of capital that our farmers have invested.

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Speaker 2: And so you know, when you're operating in a finite

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Speaker 2: resource environment, whether that be cash or others, you've got

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Speaker 2: to put your farmer's capital things that we're going to

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Speaker 2: get the best return and consumers still is the lag

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Speaker 2: out of that. So the economics of it, I think

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Speaker 2: are quite clear. I think you get to the emotional

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Speaker 2: element from our farmers that are their brands that they've

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Speaker 2: invested in, and we all understand them. But at the

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Speaker 2: end of the day, I've got to look through that

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Speaker 2: and say what's the right thing to do for the

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Speaker 2: cop well in to the next generation or two. I

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Speaker 2: will take that to farmers at the end of October

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Speaker 2: for a vote. We're we're out on farm next week

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Speaker 2: talking to a range of farmers to get their views

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Speaker 2: and to answer their questions. But you know, we feel

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Speaker 2: confident in our position going forward, but ultimately files will

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Speaker 2: have the end of October.

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Speaker 1: All right, Myles, appreciate your time tonight Miles Han and

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Speaker 1: congratulations on the result Miles Harold, chief executive at Vounteering.

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