Half Year 2026 Fonterra Co-Operative Group Ltd Earnings Call Transcript
Key Points
- Fonterra Co-operative Group Ltd (NZSE:FCG) reported strong results across all parts of the organization, driven by an increase in milk prices.
- The company has effectively managed its exposure to the Middle East, maintaining product flow despite shipping delays and additional costs.
- Fonterra's hedging strategy for energy costs, including diesel and coal, has been effective, minimizing potential impacts.
- The company is on track with its ERP program, with no cost overruns or time delays, and expects to maintain its profitability targets.
- Fonterra's foodservice segment showed strong growth in margins, benefiting from declining fat prices and increased sales.
- Shipping delays and additional costs in the Middle East could impact future earnings if the situation persists.
- ERP costs are expected to peak in FY26 and FY27, potentially affecting short-term financial performance.
- The competitive landscape remains challenging, with no new competitor builds announced, but ongoing competition for milk supply.
- The company's dividend policy remains unchanged, with no foreseeable increase despite a stronger balance sheet.
- Volatility in the Australian ingredients business remains a concern, although recent performance has improved.
Thank you for standing by, and welcome to the Fonterra FY26 interim results briefing. (Operator Instructions)
I would now like to hand the conference over to Mr. Miles Hurrell, CEO. Please go ahead.
Good morning. Thank you for joining us this morning. I'm joined this morning by Andrew Murray, Ronald, and Richard here to answer your questions on the half-year results.
But headline numbers for me or headline comments for me is that really pleased with the results that we've been able to put out today on the back of an increase in milk price in recent times of which we've increased our forecast on that this morning. The team have delivered a set of strong results across all parts of the organization.
So on that, I'll hand across to the questions. Thank you.
Questions & Answers
(Operator Instructions) Joshua Dale, Craigs Investment Partners.
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