Richard Allen: Fonterra CEO on the co-op reporting a profit of $2.6 billion
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Hei hei! Jos mä saisin valita, OP Koti myisi meidän kodin. Miks? Tää oli vasta mun neljäs esittely. Mä tunnen, että se pariskunta tekee tarjouksen. Ehkä. Jätä asunnonmyynti OP Kodin kiinteistönvälittäjän huoleksi. Saa tutkitusti parasta asiantuntemusta paikallisista asuntomarkkinoista. Tutkimuslähteenä Suomi tänään kiinteistönvälitystutkimus 2025. We've
all seen the numbers from Fonterra, 2.6 billion full-year profit, total revenue 27 billion, almost 20 billion back into the New Zealand economy. Final milk price at 969, total dividend 73 cents. Whatever way you slice it, it looks good. Richard Allen is the CEO, of course, of Fonterra and is back with us this morning.
Morning,
Mike. And congratulations to you. Is there much celebration and good vibes within the co-op given what's happened?
Yeah, it was a pretty proud day, I'd say. You know, this is a pretty good result after 12 months of, you know, a lot of hard work from our farmers and the team and a challenging world. And
you would happily defend Miles Hurrell in
his $8 million? Look, 100%, the team and I all agree he earned that. So we're in a great spot.
So the sale, I can't remember whether I asked you about this last time. I'm assuming your official line is you backed the sale. It was a good idea. How much does that enhance what you did? And will we miss it next year?
Look, I think if you look at the whole purpose to the sale was we wanted to become a focused B2B business. We know what we're good at and how we make money. And if you look at the improvement in the underlying results across the years, we've continued to see strength in our B2B business. So the underlying business growing from 54 cents to 71 cents in terms of profitability growth. I think most importantly, the number I look at is return on capital. Return on capital over the 26th season was 14.2%, 13% from our ingredients business, 16% from food service. Those are really, really good numbers. And it shows where we're focused and we execute, we deliver good returns to the farmers. What's your job now?
Are you at peak performance as a
company? No, I think we're just beginning. So there's more where that came from.
Yeah, you would have seen the announcement yesterday. Hopefully, we're investing an incremental billion dollars over the next three years into our manufacturing network. We see a huge opportunity in continuing to upgrade our assets to move where demand is going, more into components of milk, more into high-value aspects of milk, using our IP, our innovation. And that's how we're going to drive value over the next 10 years. So that's the protein story. Correct. How much of that's around GLPs? GLPs are a contributing factor, but it's much more than that. Consumers more and more want protein-rich, nutrient-dense foods sustainably produced. It's how dairy is produced. It's how their food is produced. But then it's also got to taste good, and it's got to be functionally beneficial.
And so that's our trifecta. We hit all three, and that's where we're seeing demand grow.
Is the burgeoning middle class globally still a real thing?
Yeah, for sure. And the opportunity for us is, you know, particularly for dairy is the first half of the, you know, 2000 to 2015 was all about infants and pediatric. And now it's all about, you know, middle age and aging. And dairy is great right across the life cycle, whether it is infant nutrition or aging nutrition. Do you meet that demand or do you have to create that demand? A little bit of both. We work really closely with our customers around the world. They're seeing the change in opportunity. And so we work with them. We've got projects with many of them that look out three, four, five, six years to go, where do we see demand going? And how can we create ingredients that enable them to create products to target new
sectors? Explain to me so I understand. Surely there are people all over the world who look at you guys and what you do and your success. And you're far from the biggest marketer. at what you do globally. Why aren't there more cows and more milk and more dairy products to meet all of this that's going
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