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Dr_Who
07-09-2009, 09:30 AM
So the farmers dont wanna list on the market, how will they pay for a huge capital raising by Fonterra? The rural sector is leveraged to the max, I assume.

I, for one was looking forward to buying some Fonterra shares in the IPO.

Hey, average NZers should have the opportunity to participate in NZ's largest industry.

macduffy
07-09-2009, 11:08 AM
So the farmers dont wanna list on the market, so how will they pay for a huge capital raising by Fonterra? The rural sector is leveraged to the max, I assume.

I, for one was looking forward to buying some Fonterra shares in the IPO.

I never thought Fonterra would become a viable investment for a non-dairyfarmer shareholder. I couldn't see any arrangement being agreed to which didn't put a priority on value being distributed via the milk payout, with overall profitability of the company coming a distant second.

A pity though, as the potential for profitable growth is undoubted if handled well. Brian Gaynor's recent article on the success of Irish former co-operative Kerry Dairy ( or some such name ) shows what might be possible.

Walfootrot
07-09-2009, 12:09 PM
Yes- bummer. I was really looking forward to buying some Fonterra shares and having a stake in NZs largest exporting company- still perhaps they may issues bonds?:confused:

Placebo
07-09-2009, 01:02 PM
Yes- bummer. I was really looking forward to buying some Fonterra shares and having a stake in NZs largest exporting company- still perhaps they may issues bonds?:confused:

They have issued debt instruments in the past, and were over-subscribed.

Yes the farmers will be reluctant to give up the current structure. But why shouldn't the townies have a share too?

Perhaps some kind of hybrid structure where there is a partial float, with the majority shareholding being held by the farmer/owners. The farmers would then be able to book equity in the floated entity, or sell their holdings a bit like what happened with AMP when it demutualised.

neopoleII
07-09-2009, 02:00 PM
all farmers know that kiwis, investors and speculators have a habit of selling out to overseas investors.
cant blame farmers for holding on to their own co op

peat
07-09-2009, 02:10 PM
yes I agree Neopole. the farmers have a deep and embedded mistrust of 'the money-magic'.
And if you look at history both ancient and recent who can blame them.

macduffy
07-09-2009, 02:25 PM
I think the "overseas control" bogey is a bit of a red herring.

It's simple enough to include restrictions/limitations on overseas ownership/control if that's what's worrying farmers. Their real concern is the company being run in a way that doesn't give priority to their return via the milk payout.

Ironic that they should be finding it necessary to raise capital. Doesn't seem so long ago that they compulsorily redeemed a big chunk of retail bonds! In retrospect, that can now be seen as a signal that they didn't really have their hearts in the "value added" business, development of which would have required every spare dollar, and then some!

;)

Dr_Who
07-09-2009, 02:28 PM
Well said Mcduffy.

Like all your children, sooner or later you gonna let them go, especially when they get too big to handle and too costly to feed.

Sideshow Bob
07-09-2009, 07:04 PM
I don't think the ownership aspect would be crucial, but control would be the more worrying aspect for farmers - however would take a major player to get any sort of control. The chnage with SFF has a maximu of 5% voting block for non supplier shareholders.

Farmers are already supply the likes of NZ Dairies, owned by a Russian company (Nutriek??) and Open Country are 25% owned by Olam from Singapore. Farmers will be loyal as long as Fonterra have the best payoff (or thereabouts) - it won't matter about market development or added value or whatever.

there would have to be some sort of hybrid system to equally reward shareholders and would be a tough balance - inveriably would be tilted the way of farmers.

Fonterra also issued some new bonds earlier this year.

macduffy
11-09-2009, 11:51 AM
Now that Fonterra have apparently decided against a market listing I wonder if anyone's giving any thought to a possible "corporate dairy farm" company, based perhaps on the 18 Crafar farms that are said to be on the market, and others who might welcome the chance to quit the industry.

If, as we are lead to believe there is a strong appetite for equity investment in dairy farming, now would seem to be an opportune time to buy these assets at favourable prices.

Dr_Who
11-09-2009, 11:55 AM
I ve actually thought about that also, Mcduffy. The only problem is that with the recent PGW, PGC and SCF problem, investors may shy away from rural sector investment for awhile.

I a still struggling to see how Fonterra can raise cash without issuing shares to the public.

macduffy
11-09-2009, 12:17 PM
Yes, rural type companies are doing it tough at the moment, a far cry from the heydays of Dalgety's, Wright Stephenson's, Williams and Kettle, Southland Frozen Meat and others. Corporate farming has never really been a success either, at least in the public listed company form.

But if we believe in the future of farming in NZ, there's got to be an opportunity there for the right people, the right methods and the right structure.

elZorro
11-09-2009, 01:10 PM
Yes, rural type companies are doing it tough at the moment, a far cry from the heydays of Dalgety's, Wright Stephenson's, Williams and Kettle, Southland Frozen Meat and others. Corporate farming has never really been a success either, at least in the public listed company form.

But if we believe in the future of farming in NZ, there's got to be an opportunity there for the right people, the right methods and the right structure.

I think that in general, the margins for the rural supply stores have been reduced so much by competition (down to about 10% average), that they then concentrate only on fast-moving items, not necesarily the items that will deliver real value for farmers longer-term. So if farmers then only buy the gear they see in the stores, the uptake of new technology is slower than it should be. On the other side, some consultants are now saying "look at the profit per kg of drymatter fed, and base all of your purchases and effort around that". This leads to more use of grass (protecting it, growing it better). It's NZ's major crop, our competitive advantage.

In a high payout year, those dairy farmers feeding supplements and with high stocking ratios win big. But they're quieter this year. The lack of money flowing about is very noticeable.

You're right macduffy, to get in on the ground floor with some of these farms would be interesting. Just needs a long-term approach, and of course the capital gain on the land is where most of the action is.

Casa del Energia
18-09-2009, 11:59 AM
So the farmers dont wanna list on the market, how will they pay for a huge capital raising by Fonterra? The rural sector is leveraged to the max, I assume.

I, for one was looking forward to buying some Fonterra shares in the IPO.

Hey, average NZers should have the opportunity to participate in NZ's largest industry.

Dr Who, you WILL be able to participate in a listing - it will just take more time. It is inevitable that there will be a public offering.
I think it has been forgotten that this has been brewing for nine years now - with a slow, often glacial march towards listing.
Consider the history - it was the Dairy Board that heavily lobbied government to disestablish the board - not the other way round. The first real change was the amalgamation of the remaining big dairy cos - Kiwi and NZDG - That got rid of any other board and CEOs other than that vested with Fonterra - now it has centralised control of the supply chain from 'cow to customer'. Simultaneously, the number and depth of 'joint ventures' overseas was ramped up. Experiments were tried with developing parts of the business into consumer and end market operations - sometimes successful, sometimes a total failure - but again, it is a slow and relentless march away from a bulk commodity supplier with large fixed contracts to direct market placement.
Over that period of time, the product mix changed as well - no longer suited to the 'marketing Board' model and more suited to a company that should be structured like the Nestles and Krafts.
This change has been a long evolution - (for good reason - in that if the farmers had realised that the present situation would occur - they would not have let the companies amalgamate and might have realised what was actually happening) - but because it has been over a long time, the multiple big changes that have already occurred are not too noticeable - - thus the listing or partial float or whatever vehicle that will be used to give Fonterra a 'normal' equity structure is in reality not that big.
Whatever happens - they will find a way of succeeding. It was always in the plan.

Dr_Who
19-09-2009, 06:46 AM
It continues to surprise me that a large number of firms dont plan for the bad times during the good times. Dont they know the party dont last forever?

The public should have a chance to participate in NZs largest industry, esp when we have given Fonterra a monopoly status that is detriment to the dairy retail prices at the grocery stores.

I am still struggling to understand how the farmers will fund Fonterra and the other rural sector companies in dire need for capital. The NZ rural sector is in debt and desperate for new capital. Time for them to wake up to reality and become part of the real world.

macduffy
19-09-2009, 08:31 AM
But Fonterra isn't a typical firm, doc.

It's a collective of dairy farmers who see their prosperity in terms of the payout price for milk. A great pity because it is NZ's biggest exporter and has huge further potential if it were to be organised and managed as a Sothern Hemisphere "Nestle".
But the owners have decided otherwise so we will just have to leave them to get on with things in their own way.

whatsup
19-09-2009, 04:56 PM
Macd...., Dint forget that Kraft Foods of the U S made a offer to buy the N Z Dairy Group in the mid 70's and nearly succeeded if it wasnt for a % of die hard stick in the mud types, the rest is history and the N Z dairy land scape would be much different to day if they had succeeded, Im not suce for better or worse, we'll never know but having gone down that road cockies will never want to lose control of their industry.

Hoop
20-09-2009, 10:49 AM
"Beware of the Butterfly Effect"

The bigger the organisation the bigger the effect it has on its environment around it. If it occupies a small environment then the effects are magnified.


...As a NZer why do I feel so uncomfortable about Fonterra ???

Dr_Who
20-09-2009, 04:53 PM
...As a NZer why do I feel so uncomfortable about Fonterra ???

Because...

1. You dont have a say in it?
2. You cant participate in it, even thou it is NZ's largest industry?
3. Your milk, yogurt, cheese etc at the dairy cost more than the ones overseas even thou NZ is one of the largest milk producers in the world?

macduffy
20-09-2009, 05:01 PM
.......and, of course, as NZ's biggest export earner, how Fonterra fares is vital to the country's future but it's hard to be confident because of the company's "keep it in the family" policy.

Or, rather, the Fonterra shareholders' insistence on that policy.

:rolleyes:

Nevl
09-11-2009, 08:01 AM
Ok it has to be said but well done Fonterra. When the price was low they were criticized for stockpiling and buying up coolstore space all over country. Now the results of that have become apparent and they have done a good job despite the global crisis. This is a good result especially since the Euro welfare farmers are still going spastic about the low prices.

Anna Naum
09-11-2009, 09:20 AM
Ok it has to be said but well done Fonterra. When the price was low they were criticized for stockpiling and buying up coolstore space all over country. Now the results of that have become apparent and they have done a good job despite the global crisis. This is a good result especially since the Euro welfare farmers are still going spastic about the low prices.

Increasing the payout from $5.10 to $6.10 while the NZD has gone up 40%+ is a good outcome.

Nevl
09-11-2009, 09:29 AM
Increasing the payout from $5.10 to $6.10 while the NZD has gone up 40%+ is a good outcome.

I think the big chance they took to take stock off the market in MArch and April to sell to the Chinese and other markets now has really paid off. I have a friend who made $500mill for JP Morgan by leasing oil tankers and storing oil when it was at $35. Fonterra seems to have done the same thing. An extra 1Bill for NZ is great and will make a huge difference in these times as Farmers have also had a good season. Still I think more than a few farmers will be paying down the mortage. As interest rates are forecast to go up next year and its a good time to be ready to pare debt before that happens.

CJ
09-11-2009, 10:19 AM
Agree with Nevl - most of the extra payout will go straight onto the mortgage so the flow on effect for the rest of the country won't be as great as other years. The banks may even enforce it!

Doyle
09-11-2009, 11:50 AM
Farmers can't not spend for ever. Don't forget theyve been doing that already for the last 12 months. Plenty of money will be going on fertiliser and feed, and any equipment that needs replacing will be replaced. MORTGAGE will be paid down, but some essential spending will be made now as well.

Also interesting to note as this is a discussion about about a proposed share float, that if we were indeed fonterra shareholders we would be absolutely disgusted with this result. Earnings guidence down from 55 cents per share at the start of the year to 35 cents now. Fonterras latest recapitalisation plans priced their shares at a divedend yield of 12% this announcement represents a yield of closer to 8% so makes that looks less attractive too. They need to find ways to maintain their margins if they are to be a long term success story.

CJ
09-11-2009, 12:24 PM
Plenty of money will be going on fertiliser and feed,

That money would have been spent anyway. My guess is a lot of banks wont let them take the cash out once the payout goes in (ie. to get their LVR to a more respectable number after farm values have fallen)..

Jay
09-11-2009, 03:41 PM
How do these payouts work.

Are what they are saying that this is expected to be the average price /payout over the year.
As the price keeps changing, Now i'm sure the farmers do not get paid out once at the end of the year??

Turboman
09-11-2009, 04:02 PM
Jay you are correct. Farmers definitely don't get paid out once at the end of the year. This would just create even more working capital issues for farmers.

My basic understanding is that they get paid out monthly on their production, however, since farmers don't produce all year round they don't recieve the 'full milk payout' but only a portion of this. I think this is why you hear them talking about the final payout at the end of the season and how much 'extra' or 'less' they will get in the next few dry months when they aren't producing.

I would be happy to be corrected if I'm wrong, I only have a very basic understanding.

Nevl
09-11-2009, 04:18 PM
How do these payouts work.

Are what they are saying that this is expected to be the average price /payout over the year.
As the price keeps changing, Now i'm sure the farmers do not get paid out once at the end of the year??

Basically Fonterra tries to estimate what will be paid out at the end of the year and starts making progress payments towards this amount. As the year develops they can on occasion change the payout forecast as they did earlier this year when they dropped it to $4.55. Since then of course markets have improved and now they have better data and more of the years supply has being sold and cash brought back to NZ and they are updating farmers on what the full years payout will likely be. As the year goes on the estimates will get better naturally. They try to provide as much detail as possible so farmers can hopefully manage farm expenditiure so that it matches income and preserve working capital.

Jay
09-11-2009, 08:24 PM
Thanks Nevl and Turboman, thought it must be something like that, but was never really sure

Nevl
09-11-2009, 09:34 PM
Heard on the news that the payout is on the 20th of each month and this final payout will be made on Dec 20th!! Should be good for the Xmas sales.

upside_umop
25-05-2010, 12:36 PM
I see a few articles out and about re Natural Dairy Holdings Ltd.

Heres an article today...who thinks the sale will go through?

http://www.stuff.co.nz/business/farming/3733948/Chinese-dairy-buyers-outraged

Personally, I'd rather it didnt. Although, dairy farm values seem relatively overvalued and nothing wrong with the Chinese taking a hit.

There appears to be a bit of a mistake in the figures?

'The sale represents 0.003% of NZ dairy cattle in NZ.'

Lets have a look at this, and assume that this is the average dairy farm in NZ...therefore, the sale would represent around 0.003% of NZ's total dairy farm value.

The sale is around $200 million...therefore, does NZ have $6.6 trillion dollars worth of dairy farms in NZ (~40 x NZ's GDP)? Calc = (1/0.003)x100x$200,000,000

We most certainly dont!!

I suspect this article is a little misleading (either that, or they believed everything MR CHIN said). Its probably out by a factor of 10/100 who knows...even still, misleading. Statistics are what makes articles relevant, and this certainly doesnt portray a relevant story.

Dr_Who
25-05-2010, 12:42 PM
Fonterra and other NZ entities have dairy farm interest in China and other parts of the world, so what reasons can we give the Chinese that they cant buy the farms in NZ? Abit hypocritical of us.

Silverlight
25-05-2010, 12:44 PM
I think you have mis read the information.

0.003% of cattle, not value.

Crafer also owned 22 farms, with 20k cows.

The purchase is only for 16 of those farms, so say that was 15k cattle, means that they are estimating 5m cattle in NZ? Does this seem more accurate?

upside_umop
25-05-2010, 12:52 PM
I know what the information said.

I'm saying, assume these are average size dairy farms then they will be approximately equal to 0.003% of the farm value in NZ?

I didnt know the number of cows crafar had, so this makes it easier:

According to Chin, we have 500 million cows. Same calc: 1/.003*100*15000 = 500,000,000

So this confirms, their data is out by a factor of 100. (Approx 5 million cows in NZ).

The sale represents 0.3% of NZ farms...which is relatively significant, IMO.

upside_umop
25-05-2010, 12:54 PM
Fonterra and other NZ entities have dairy farm interest in China and other parts of the world, so what reasons can we give the Chinese that they cant buy the farms in NZ? Abit hypocritical of us.

They only allow 50% ownership in China in most cases. Here they want to buy outright, and control the supply chain. I guess it comes down to whether the Chinese could tarnish NZ's look and therefore our 'premium' product?

Dr_Who
25-05-2010, 01:07 PM
They only allow 50% ownership in China in most cases. Here they want to buy outright, and control the supply chain. I guess it comes down to whether the Chinese could tarnish NZ's look and therefore our 'premium' product?

Fair comment. Maybe we can structure it in a way that will have a win/win situation. Our rural sector is starving of capital.

moimoi
25-05-2010, 01:44 PM
why are they even being sold....the government provided a guarantee to the banks to enable them to raise funds offshore and continue business...why doesn't the same governement provide a guarantee to the existing crafars farms lenders, install managers and press on with operating the farms...alternatively it could turn the lot of them into a training institute of sorts and train young would be farmers up on the skills needed...are we not supposed to be supporting NZ industry and enterprise.?

there is plenty of folk out of work...someone i know had a job interview yesterday for a part time administration job offering 9 hours employment per week. There are 250 applicants.!!

The banks got looked after..how about NZ industry??

Jaa
25-05-2010, 02:52 PM
The government already owns a big farm manager, LandCorp but why should it buy these farms?

They are marginal dairy farms for the most part, we aren't selling Matamata or Hawea here! My bet would be the Chinese learn a hard lesson on this one and exit New Zealand after losing their shirts. They seem to have no farming experience or even any backing, they are simply selling a dream to Hong Kong shareholders. Or put another way, would GPG or maybe Fay Richwhite have made NZFSU better or worse than PGW?!?

Personally I liked Chris Lee's idea of SCF folding dairy holdings into the Crafar farms and listing at least part of it on the stock exchange. NZFSNZ anyone?

percy
25-05-2010, 03:13 PM
Fair comment. Maybe we can structure it in a way that will have a win/win situation. Our rural sector is starving of capital.

Would be good if we could structure that way.As you point out win/win situation.

whatsup
26-05-2010, 09:44 AM
Fonterra and other NZ entities have dairy farm interest in China and other parts of the world, so what reasons can we give the Chinese that they cant buy the farms in NZ? Abit hypocritical of us.


Dr W..., Reason, NO ONE can buy land in China, you can lease it long term but the actual ownership stays with the Chinesse ala Hong Kong 1997 , makes a big difference when they EXPECTED to buy N Z farm land, now thats HYPOCRITICAL !!!

RTM
01-12-2017, 12:03 PM
Doesn't sound to good and I hold a few.
https://www.msn.com/en-nz/money/business/fonterra-danone-arbitration-decision-due/ar-BBFYR45?li=BBqdg4K&ocid=spartanntp
A contingent liability of just $14m on their books, and a bill for $180m
I hope their attention to detail, quality and quality systems is laser focussed going forward.

whatsup
01-12-2017, 12:07 PM
A HUGe ! award, Must not to have had a leg to stand on and are there others out there waiting to come out of the woodwork after this award ?

fungus pudding
01-12-2017, 12:14 PM
A HUGH award, Must not to have had a leg to stand on and are there others out there waiting to come out of the woodwork after this award ?

Who is Hugh?

peat
01-12-2017, 03:04 PM
Hugh is a big man!

Doesnt justice take so long sometimes that you think its never going to happen ?
(Am I'm not saying this decision is correct or not, just saying it is the current legal status)

I heard this fine is about 11 cps so not that massive. But more to the point of the company and its abilities to succeed.

RTM
01-12-2017, 05:59 PM
What I can't figure out is why FSF is up 4c today !
Wished I had been at home, may have sold.
Outstanding.

elZorro
01-12-2017, 08:02 PM
Hugh is a big man!

Doesnt justice take so long sometimes that you think its never going to happen ?
(Am I'm not saying this decision is correct or not, just saying it is the current legal status)

I heard this fine is about 11 cps so not that massive. But more to the point of the company and its abilities to succeed.

This was such a disorganised mess by Fonterra. In 2013 they went to AgResearch instead of their own labs or AsureQuality, and in the end one dead mouse at AgResearch sparked the recall. Very poor quality lab work by an unaccredited lab, and in any case they should have expanded the tests before coming to any conclusion.

Hopefully they have much better systems in place now, at Fonterra.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11120976

winner69
04-12-2017, 05:30 AM
What I can't figure out is why FSF is up 4c today !
Wished I had been at home, may have sold.
Outstanding.

Punters know what they up for now so brings certainty about the future ....relief

Reduces this years divie but doesn’t affect future years

Will reported as an abnormal item ...normalised still looking pretty good

whatsup
04-12-2017, 08:47 AM
What I can't figure out is why FSF is up 4c today !
Wished I had been at home, may have sold.
Outstanding.

RIM, a very good out come the judgement could have been much more ie $500 PLUS !!

RTM
04-12-2017, 09:36 AM
Whatsup and Winner, lucky I wasn’t home then!
Thanks.

Out to lunch
04-12-2017, 10:57 AM
Fonterra still really strong though, they can make this up with some positive stream returns (although unlikely) or the expected growth in the Chinese milk formula market (lots of brands won't be able to be sold as at 1/1/18).
Low production from a potential drought is probably more financially ruining than this claim.

Absolute144
28-12-2017, 05:16 PM
Has anybody recently worked out the Enterprise value and EBITA of fonterra? if so please post. thanks

Louloubell
15-01-2018, 09:14 AM
Just read about a re-call of French baby formula products in a foreign newspaper. A world-wide recall; actual salmonella found in the product. Can't be bad for Fonterra.

https://www.ad.nl/binnenland/babymelk-uit-nederlandse-winkels-door-salmonella-gevaar~ad02b802/

Timesurfer
27-02-2019, 05:15 PM
If you were wanting to capitalize on NZs clean green brand is this what you would be announcing to the world? link (http://www.sharechat.co.nz/article/f5f9b04b/fonterra-takes-minority-stake-in-biotech-firm-motif-ingredients.html?utm_medium=email&utm_campaign=After%20the%20Bell%20Wednesday%2027th %20February%202019&utm_content=After%20the%20Bell%20Wednesday%2027th% 20February%202019+CID_129aeda97cbb9d7df6fd7ea0161b fd5b&utm_source=Email%20marketing%20software&utm_term=Fonterra%20takes%20minority%20stake%20in% 20biotech%20firm%20Motif%20Ingredients)
Obviously this is why am not some high flying CEO - I am just not clever enough.

bull....
28-02-2019, 07:50 AM
another disaster result , when they going to split the company up , retain control and list the value proposition.

macduffy
28-02-2019, 11:44 AM
another disaster result , when they going to split the company up , retain control and list the value proposition.

I wouldn't hold my breath, bull. As we know, Fonterra's a co-operative and it's all about maximising the milk payout to the owners.

bull....
28-02-2019, 11:52 AM
I wouldn't hold my breath, bull. As we know, Fonterra's a co-operative and it's all about maximising the milk payout to the owners.

farmers could make more money if structured right ... no brains

bull....
05-03-2019, 08:37 AM
this is bad news for fonterra

kelloggs will also stop using all dairy ingredients, including cheese, lactose, whey and milk powder in its recipes.

https://www.marketwatch.com/story/kelloggs-owned-veggie-burger-brand-morningstar-farms-to-go-all-vegan-by-2021-2019-03-04

the future is unfolding and its all bad news for fonterra and there commodity model

bull....
08-03-2019, 08:29 AM
Hurrell has said the Fonterra's underlying performance isn't where it needs to be, with challenges in the Australian ingredients, and Asian foodservice units. A fundamental change in direction is needed to realise Fonterra's potential, he said.

http://www.sharechat.co.nz/article/45e9f04c/judith-swales-tasked-with-running-fonterra-s-consumer-and-food-service-unit.html

be good if that means splitting the business into high value / commodity and listing the high value while retaining control. hate to think it means selling the high value. just been looking at dean foods in the US and all the problems they aare having because they concentrate mainly on milk.

Sideshow Bob
08-03-2019, 09:35 AM
Hurrell has said the Fonterra's underlying performance isn't where it needs to be, with challenges in the Australian ingredients, and Asian foodservice units. A fundamental change in direction is needed to realise Fonterra's potential, he said.

http://www.sharechat.co.nz/article/45e9f04c/judith-swales-tasked-with-running-fonterra-s-consumer-and-food-service-unit.html

be good if that means splitting the business into high value / commodity and listing the high value while retaining control. hate to think it means selling the high value. just been looking at dean foods in the US and all the problems they aare having because they concentrate mainly on milk.

Fonterra are in the classic 'stuck in the middle' in terms of their strategic position. They aren't a commodity lowest cost operator (Open Country), they aren't an niche player (Tatua), not an added value operator (Synlait) and not vertically integrated with ownership in market (ie Chinese companies). They are trying to be all of these things, and floundering...….Hurrell has to try to turn around the Titanic, with no easy answers.

bull....
20-03-2019, 07:42 AM
still confused on there strategy? except the part about we must reduce our debt

Balance
20-03-2019, 07:56 AM
still confused on there strategy? except the part about we must reduce our debt

Yup.

'Portfolio review' - buzz words for asset sales to reduce debts (forced usually by banks) and for getting rid of all the bad investments made by Fonterra and booking hundreds of millions of losses as they are gotten rid off, with accumulated losses on investments now well in excess of $1 billion! Latest being the $126m to be written off on the sale on Inlaca.

'Getting back to basics' - buzz words for running out of ideas so best to concentrate on milking cows and New Zealanders!

Can be sure in 5 years' time that Fonterra will be back with a 'new' strategy of getting into consumer end products to enhance margins - back to the future!

bull....
20-03-2019, 08:05 AM
Yup.

'Portfolio review' - buzz words for asset sales to reduce debts (forced usually by banks) and for getting rid of all the bad investments made by Fonterra and booking hundreds of millions of losses as they are gotten rid off, with accumulated losses on investments now well in excess of $1 billion! Latest being the $126m to be written off on the sale on Inlaca.

'Getting back to basics' - buzz words for running out of ideas so best to concentrate on milking cows and New Zealanders!

Can be sure in 5 years' time that Fonterra will be back with a 'new' strategy of getting into consumer end products to enhance margins - back to the future!

totally another fbu here

Raz
20-03-2019, 08:18 AM
Worse than a mixed result imho

bull....
20-03-2019, 11:31 AM
ceo just on cnbc all they talked about was pretty much debt reduction , so there strategy is debt reduction lol for this yr maybe next yr ? really a company going backwards for the fore seeable future i see.

Sideshow Bob
20-03-2019, 12:23 PM
Debt reduction also means a cull out of head office. Wait for another wave on ex-Fonterra execs to float out of HQ with a golden handshake....

bull....
20-03-2019, 01:02 PM
fundamentally the company is flawed , with there structure. if floated some of the business they could reduce debt. lol obviously difficult for them farmers to understand

bull....
22-03-2019, 08:24 AM
Patience needed for Fonterra's streamlining, says FNZC


http://www.scoop.co.nz/stories/BU1903/S00540/patience-needed-for-fonterras-streamlining-says-fnzc.htm

lol i dont know how much time is needed but the world is changing quickly and fonterra and its old dinosaurs who only see milking cows as the future are on a path to oblivion.

Meanwhile, reduced demand for cow’s milk and falling prices led to the closure of 1,000 dairy farms in the UK (https://www.bbc.co.uk/news/uk-england-36764592) between 2013 and 2016. Milk’s reputation as a healthy food is under threat from anxieties about bovine antibiotics, animal cruelty and the industry’s environmental impact, as well as increased diagnosis of lactose intolerance. Teenagers now consider cow’s milk less healthy than plant milk alternatives,

White gold: the unstoppable rise of alternative milks


https://www.theguardian.com/news/2019/jan/29/white-gold-the-unstoppable-rise-of-alternative-milks-oat-soy-rice-coconut-plant


also the rise of plant based meats disrupting the meat industry.

bull....
03-04-2019, 04:58 AM
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12218552

yrs ago people were in up roar about farm land being brought up by foreigners , we dont want to be peasants on our land they said. now foreigners have become more crafty ( smarter than us lol ) they instead buy up businesses so badly run and debt ridden (seems this is a big problem in nz) they have no choice but to sell. guess what people you still end up being peasants on your land one day as business owners will dictate the price you receive.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12218559

i see a smart strategy at play from competitors ( probably fantasy lol ) strategy says competition is big company reliant on 1 big customer , take out the smaller operators and set up new businesses , set up your supply chains. 1 day restrict supply of your big competition while your champions continue to supply, capture market share from big competition unable to sell all goods because you can. eventually you will control the market.
or alternative just watch them self destruct lol and take supply

bull....
06-04-2019, 02:59 PM
another dairy company on the verge of biting the dust

Investors are betting there’s no easy fix for Dean Foods Co., with the top U.S. dairy company’s bonds sinking deeper into distressed territory amid a long-term decline in American milk demand.

https://www.bloomberg.com/news/articles/2019-04-05/dean-sinks-most-among-food-bonds-on-dairy-turnaround-skepticism?srnd=premium-asia



Brian Gaynor: Should Fonterra list before it's too late?
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12219775

farmers cant see past the milk return so i doubt it , even listing and owning majority control they still dont get that either

bull....
23-04-2019, 08:36 AM
Mercury rises in race for Fonterra's Tip Top ice cream
Tip Top has a strong history and brand in its own right, and the private equiteers reckon it could flourish again with some special attention and capital support.

https://www.afr.com/business/banking-and-finance/mercury-rises-in-race-for-fonterra-s-tip-top-ice-cream-20190422-p51g49

capital support sums it up exactly

winner69
13-05-2019, 07:45 AM
Tip Top sold for $380m

What a load of the proverbial this signoff is “Tip Top has always listened to consumers and cared about their changing tastes,.....”

Hope new owners put Cookies and Cream back in 2l packs .....mind you Moore’s isn’t too bad.

jg8512
13-05-2019, 08:21 AM
"340 serves of every minute of every day". That's about 178m serves a year.
At a required return of say 7.5% p.a., you need to earn $28.5m p.a. to cover the cost of your investment ($380m), or only about 16 cents profit per serve. On those modest metrics, Tip Top is a steal IMHO. (All that ignores any growth Tiptop might make)

Fonterra's excessive debt, has lead them to sell a value add business (with growth potential), for a song. Instead, the press release crows that "signedan agreement with the new owners to supply milk … [so] …Fonterra farmers willcontinue to be part of the Tip Top story …” Jesus wept.

bull....
13-05-2019, 08:24 AM
"340 serves of every minute of every day". That's about 178m serves a year.
At a required return of say 7.5% p.a., you need to earn $28.5m p.a. to cover the cost of your investment ($380m), or only about 16 cents profit per serve. On those modest metrics, Tip Top is a steal IMHO. (All that ignores any growth Tiptop might make)

Fonterra's excessive debt, has lead them to sell a value add business (with growth potential), for a song. Instead, the press release crows that "signedan agreement with the new owners to supply milk … [so] …Fonterra farmers willcontinue to be part of the Tip Top story …” Jesus wept.

poorly run business with to much debt always end up selling good assets at fire sale prices

kiora
13-05-2019, 08:26 AM
+++++ All Fonterra shareholders to!Management are a b####y disgrace

steveb
13-05-2019, 08:29 AM
wonder how negotiations went on about Fonterra's other ice cream brand @ Kapiti,anyone know if there is any restraint of trade,if so it could well be an own goal

bull....
13-05-2019, 08:40 AM
wonder how negotiations went on about Fonterra's other ice cream brand @ Kapiti,anyone know if there is any restraint of trade,if so it could well be an own goal

kapiti looks to be part of the sale , news artle from reuters refers to kapiti and tip top , trumpet as the leading brands in the sale

winner69
13-05-2019, 11:09 AM
kapiti looks to be part of the sale , news artle from reuters refers to kapiti and tip top , trumpet as the leading brands in the sale

“We will also retain full global ownership of the Kāpiti brand and will be licencing its use for ice cream to Froneri. This means our popular Kāpiti cheese isn’t going anywhere.”

peat
13-05-2019, 01:03 PM
kapiti looks to be part of the sale , news artle from reuters refers to kapiti and tip top , trumpet as the leading brands in the sale


“We will also retain full global ownership of the Kāpiti brand and will be licencing its use for ice cream to Froneri. This means our popular Kāpiti cheese isn’t going anywhere.”

lol

bulls dont make milk, they just make bullsh*t

bull....
13-05-2019, 01:42 PM
lol

bulls dont make milk, they just make bullsh*t

lol you obviously dont understand the pitfalls of licencing a brand. without knowing the contract they could include losing control of your product from production to packaging etc etc etc , the licence holder may never produce much of the product preferring to promote there brands instead. these are just a few.

so technically they have sold the brand

minimoke
13-05-2019, 02:38 PM
l

so technically they have sold the brandThey have retained the Brand. But a brand is useless unless you produce something under it. I dont see anywhere where Froneri is compelled to produce Kapiti branded ice cream product.

steveb
13-05-2019, 02:46 PM
surely if they have licensed the brand,Fonterra would have a performance clause in the agreement?

bull....
13-05-2019, 03:44 PM
They have retained the Brand. But a brand is useless unless you produce something under it. I dont see anywhere where Froneri is compelled to produce Kapiti branded ice cream product.

yes your right they have the brand but may have lost control of the product

macduffy
14-05-2019, 09:10 AM
I would think that retention of the brand is essential if they are to keep producing Kapiti cheeses. Mind you, that may be the next added value bit of the business to go on the block!

:ohmy:

winner69
23-05-2019, 07:34 AM
Another earnings downgrade


As a result, Fonterra is revising its earnings guidance range from 15 - 25 cents per share to 10 - 15 cents per share

And can’t hack in Australia

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FCG/334900/300327.pdf

bull....
23-05-2019, 08:13 AM
Another earnings downgrade


As a result, Fonterra is revising its earnings guidance range from 15 - 25 cents per share to 10 - 15 cents per share

And can’t hack in Australia

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FCG/334900/300327.pdf

not a surprise , they dont want to make the hard decisions around capital structure which would enable growth.

See dean foods in the US the biggest milk producer is on the verge of going bust.

bull....
29-05-2019, 03:38 PM
hitting new lows

whatsup
29-05-2019, 04:00 PM
hitting new lows

I think it will be many a year before the listed Fonterra units have a meaningful future, for that to happen the co-op model has to be revamped and only 80% of the milk solid returns to be paid to the suppliers, but that wont happen !!!

Marilyn Munroe
30-05-2019, 09:16 AM
While commentators have rightly given Fonterror a good kicking for their China investment debacle they have not discussed an important lesson to be learned.

Investing in China is hard. There are too many angry tigers hiding in the bamboo waiting to pounce and drag you down. With the recent inward looking change in Chinese politics the situation is likely to get worse.

When deciding whether to invest in China and being told tales of a zillion Chinese waiting to buy your product the correct response for directors is to say "yeah nah".

Boop boop de do
Marilyn

whatsup
30-05-2019, 10:34 AM
While commentators have rightly given Fonterror a good kicking for their China investment debacle they have not discussed an important lesson to be learned.

Investing in China is hard. There are too many angry tigers hiding in the bamboo waiting to pounce and drag you down. With the recent inward looking change in Chinese politics the situation is likely to get worse.

When deciding whether to invest in China and being told tales of a zillion Chinese waiting to buy your product the correct response for directors is to say "yeah nah".

Boop boop de do
Marilyn


Yeh, case of "believe nothing of what you hear and half of what you see ", imho.

bull....
30-05-2019, 12:56 PM
I think it will be many a year before the listed Fonterra units have a meaningful future, for that to happen the co-op model has to be revamped and only 80% of the milk solid returns to be paid to the suppliers, but that wont happen !!!

if they ever recover , milk consumption is on decline due to various factors

bull....
03-06-2019, 09:11 AM
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12218552

yrs ago people were in up roar about farm land being brought up by foreigners , we dont want to be peasants on our land they said. now foreigners have become more crafty ( smarter than us lol ) they instead buy up businesses so badly run and debt ridden (seems this is a big problem in nz) they have no choice but to sell. guess what people you still end up being peasants on your land one day as business owners will dictate the price you receive.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12218559

i see a smart strategy at play from competitors ( probably fantasy lol ) strategy says competition is big company reliant on 1 big customer , take out the smaller operators and set up new businesses , set up your supply chains. 1 day restrict supply of your big competition while your champions continue to supply, capture market share from big competition unable to sell all goods because you can. eventually you will control the market.
or alternative just watch them self destruct lol and take supply

i see china on the weekend have declared a new policy that any company in the world that threatens there local firms may be blacklisted as a security threat.

bull....
04-06-2019, 03:58 PM
According to Liu’s translation, the government will “encourage Chinese companies to buy foreign producers and/or set up production facilities overseas, so as to reduce cost of raw ingredients”.

https://www.afr.com/chanticleer/china-wipes-1bn-from-a2-milk-20190604-p51u8q

bull....
06-06-2019, 12:59 PM
Given the significant increase in competition within the New Zealand dairy industry, we're disappointed the Government did not recommend removing the requirement for us to supply our farmers' milk to large, export-focused businesses altogether," Monaghan said.

https://www.stuff.co.nz/business/farming/113280868/dirty-dairy-farmers-to-be-stopped-supplying-milk-to-fonterra

yep govt wants to help foreigners take over the dairy industry

RTM
06-06-2019, 01:25 PM
Given the significant increase in competition within the New Zealand dairy industry, we're disappointed the Government did not recommend removing the requirement for us to supply our farmers' milk to large, export-focused businesses altogether," Monaghan said.

https://www.stuff.co.nz/business/farming/113280868/dirty-dairy-farmers-to-be-stopped-supplying-milk-to-fonterra

yep govt wants to help foreigners take over the dairy industry

This is not good at all. Interesting times ahead. Imagine China owning a substantial portion of our dairy processing.....and NZ aligned with USA "politically". Can't get my head around that. Doesn't feel like it will be a good outcome for NZ tho.

bull....
01-07-2019, 10:58 AM
Economist warns Fonterra could end up in foreign hands
The dairy giant's problems are deep seated, and the farmers who own it are partly to blame because they demand too high a price for their milk and starve Fonterra of the capital it needs

https://www.stuff.co.nz/business/113829179/economist-warns-fonterra-could-end-up-in-foreign-hands

NZSilver
01-07-2019, 11:18 AM
They have had plenty of capital and finance, they just keep putting it into horrendous "investments" and eroding it very quickly. (Beingmate, China farms...) Then they find themselves strangled by debt they used to buy the ****ty assests and undertaking a fire sale of the good ones (Tiptop and more)

NZSilver
01-07-2019, 11:23 AM
If only they had invested in nz in the likes of A2 milk or synlait, we would all be praising fonterra. But you know offshore investments are so much more exciting and Theo and his smarts new best

bigbruce
01-07-2019, 11:56 AM
Farmers are farming capitol gain, requiring Fonterra to provide a high payout to finance the high land values.Fonterra good at removing water from milk, supplying powder which the world has ample.

RTM
01-07-2019, 12:00 PM
Economist warns Fonterra could end up in foreign hands
The dairy giant's problems are deep seated, and the farmers who own it are partly to blame because they demand too high a price for their milk and starve Fonterra of the capital it needs

https://www.stuff.co.nz/business/113829179/economist-warns-fonterra-could-end-up-in-foreign-hands

Government bailout like Air New Zealand ? Jeeze….are we this useless ?
Really disappointing if he is right. Having our major industries in off-shore hands is really not tenable.

bull....
01-07-2019, 12:04 PM
Government bailout like Air New Zealand ? Jeeze….are we this useless ?
Really disappointing if he is right. Having our major industries in off-shore hands is really not tenable.

offshore interests are already quietly taking over the dairy industry. look at all the manufacturing setting up here and being acquired. they probably quietly smirking at fonteras problems

whatsup
01-07-2019, 12:16 PM
Farmers are farming capitol gain, requiring Fonterra to provide a high payout to finance the high land values.Fonterra good at removing water from milk, supplying powder which the world has ample.

Not forgetting the tax free cap gains when the cockies sell, imo the dairy industry has kind of shot its in the foot what with the higher and higher ( valuation ) that their farm values up at, sometimes the only purchaser in the guy next door who can make the numbers work by averaging the "numbers " over the combined acreage and this is what is scaring the banks atm.
Speaking of the banks, as most of them are Aust owned they do not want a repeat here of what is happening over there.

NZSilver
01-07-2019, 03:39 PM
Add houses prices to the same camp as farm land values, kiwi cockies and Cap Gains is no different to townies and housing cap gains. Most of the time both parties need a bank willing to lend the money.... Fonterras underlying business is pretty good, they just need to stop investing in crap

whatsup
01-07-2019, 04:03 PM
Add houses prices to the same camp as farm land values, kiwi cockies and Cap Gains is no different to townies and housing cap gains. Most of the time both parties need a bank willing to lend the money.... Fonterras underlying business is pretty good, they just need to stop investing in crap

Housing for ones shelter was always to be exempt C G , farming and businesses not so !!

dreamcatcher
02-07-2019, 11:05 PM
Does anyone think A2 and Fonterra are going to announce anything positive in Aug .......SP certainly smashed but there are still buyers here.

bull....
03-07-2019, 06:49 AM
Does anyone think A2 and Fonterra are going to announce anything positive in Aug .......SP certainly smashed but there are still buyers here.

no the only thing fonterra will be announcing in the future is all there asset they are selling meanwhile the stock price will keep sinking and competitors will keep setting up

bull....
04-07-2019, 01:44 PM
price crashing today probably related to the westland sale

whatsup
04-07-2019, 02:43 PM
So after todays Westland sale what is Fonterra worth, SUB $3.50 and falling ATM ! ??

bull....
04-07-2019, 03:09 PM
So after todays Westland sale what is Fonterra worth, SUB $3.50 and falling ATM ! ??

ask the chinese

troyvdh
04-07-2019, 04:16 PM
The only positive I can see...at least the chinese cannot take the land home...for now.
This probably applies more to Westland however i believe the same applies to many situations.
Gee one day ...we may be at war with china !

bull....
09-07-2019, 08:36 AM
Fonterra CFO Marc Rivers rejects foreign ownership talk
https://www.stuff.co.nz/business/farming/114079936/fonterra-cfo-marc-rivers-rejects-foreign-ownership-talk

gee if they just listed the value add on the nzx while retaining majority control and raising the much needed capital they wouldnt have to be in such a weak financial position

GTM 3442
09-07-2019, 02:32 PM
Fonterra CFO Marc Rivers rejects foreign ownership talk
https://www.stuff.co.nz/business/farming/114079936/fonterra-cfo-marc-rivers-rejects-foreign-ownership-talk

gee if they just listed the value add on the nzx while retaining majority control and raising the much needed capital they wouldnt have to be in such a weak financial position

Given the share price performance of FSF over the past couple of years, is that viable? Would you be buying?

Timesurfer
10-07-2019, 08:38 AM
Instead they intend to cash up and cut back to reduce debt by $800m.
I like the sound of some of what they are doing, but I am not sure that they have learned their lesson about reputational damage by dabbling with dodgy partners overseas.

sb9
17-07-2019, 04:09 PM
Behind paywall on NBR online today, headline says it all...
No relief for Fonterra as Beingmate issues profit warning (https://www.nbr.co.nz/story/no-relief-fonterra-beingmate-issues-profit-warning)....

Marilyn Munroe
01-08-2019, 08:20 PM
There is an article on the site interest.co.nz talking up Kiwi investment in Indian dairy, where Kiwi methods would reward investors with rivers of cash no wurries.

https://www.interest.co.nz/rural-news/100980/guy-trafford-looks-indian-dairy-industry-fonterra-has-their-eye-there-too-even

But then; "Why big dairy companies struggle in India."

https://www.youtube.com/watch?v=4mBiFEspcIM

Boop boop de do
Marilyn

winner69
12-08-2019, 07:43 AM
Oh dear ...no dividend this year ....probably upset many

But not surprising when you write off $850m ..eventually facing up to the inevitable

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FSF/338912/305073.pdf

bull....
12-08-2019, 09:47 AM
Oh dear ...no dividend this year ....probably upset many

But not surprising when you write off $850m ..eventually facing up to the inevitable

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FSF/338912/305073.pdf

farmers will be upset , but comes as no surprises to us eh winner. sooner farmers wake up to the fact they need to raise capital to solve there problems the better. cant understand how they dont get it about listing 49% and retaining 51% means they still have control of fonterra.

Balance
12-08-2019, 10:53 AM
farmers will be upset , but comes as no surprises to us eh winner. sooner farmers wake up to the fact they need to raise capital to solve there problems the better. cant understand how they dont get it about listing 49% and retaining 51% means they still have control of fonterra.

ATM should have shone a light in the last few years of what they need to do - put in market discipline on the directors and managers - rewards only if they perform.

I know a few Fonterra executives and it staggers me how much they are paid for what they do.

I wonder how shareholders and farmers feel if they know that Fonterra is paying interns over $100k a year?

Tomtom
12-08-2019, 11:01 AM
This shouldn't be a surprise to anyone paying attention. Fonterra has suffered from performance and governance issues for years which had left the co-op retaining little of its earnings. It was basically just acting as a vehicle for farmers interests and supporting pricing.

It's international competitors have far outperformed Fonterra.

Marilyn Munroe
12-08-2019, 12:11 PM
Can anyone point out a farmer owned co-operative which knows what it is doing?

Boop boop de do
Marilyn

kiora
12-08-2019, 01:27 PM
Farmlands,Ravensdown,Balance,FMG

Jaa
12-08-2019, 07:04 PM
Zespri has done very well.

NZSilver
12-08-2019, 08:22 PM
LIC livestock improvement corp

Balance
12-08-2019, 08:36 PM
What an indictment of NZ Inc.

Seems like every other major NZ company has to get into serious trouble due to gross incompetence, loses billions of dollars before action is finally taken to right the ship - Air NZ, Telecom, Fletcher Challenge, DFC, BNZ, TranzRail, NZ Steel, NZ Refining etc ...one after another.

Now we have the mother of all failures - Fonterra.

BeeBop
13-08-2019, 06:45 AM
This shouldn't be a surprise to anyone paying attention. Fonterra has suffered from performance and governance issues for years which had left the co-op retaining little of its earnings. It was basically just acting as a vehicle for farmers interests and supporting pricing.

It's international competitors have far outperformed Fonterra.

A master at “following”, committee decisions finding the mid-point that meets all rather than actually doing the right thing, blinkers over their eyes ignoring their examples before them (cheapest solution), short-term goals driven by bonuses at all costs.

bull....
20-08-2019, 11:32 AM
hitting new lows wow this thing is going much lower i reckon esp when results are released. they are stuffed because of there ignorance around raising new capital thru a 51/49 listed ownership model. co op dead chinese taking over nz dairy industry they are very happy on fonterras current issues

kiora
21-08-2019, 10:58 AM
Well put I say
https://www.stuff.co.nz/business/farming/opinion/115119745/lets-mock-fonterras-velocity-leadership

bull....
21-08-2019, 11:19 AM
Well put I say
https://www.stuff.co.nz/business/farming/opinion/115119745/lets-mock-fonterras-velocity-leadership

lol the way the companies going i imagine a2 will be able to buy some of the fire sale assets with there cash pile in time

kiora
21-08-2019, 01:28 PM
lol the way the companies going i imagine a2 will be able to buy some of the fire sale assets with there cash pile in time

Different beasts.Might sink A2?

bull....
26-08-2019, 08:28 AM
FONTERRA might take a hit with the new trade deal between US AND JAPAN

Balance
26-08-2019, 08:33 AM
FONTERRA might take a hit with the new trade deal between US AND JAPAN

Could be a positive as Fonterra is the world’s biggest facilitator of dairy trades.

Japan has been a highly protected market for ever - need to be self-sufficient in agricultural products etc BS. This deal (still in principle) could very well open up that market - Japanese consumers pay the highest price in the world for all their agricultural products!

NZSilver
26-08-2019, 08:57 AM
If NZ sits quietly and makes no noise, our primary sector will do fine it of the trade war (and to swine fever). Chinese buyers not letting up on demand for NZ milk powder, beef & lamb. Also NZ $ will follow Yuan down while products priced in USD. NZ beef exports to China up 100% yoy.

pg0220
26-08-2019, 09:05 AM
Japanese consumers pay the highest price in the world for all their agricultural products!
Really? Do you have an evidence that the agricultural product prices in Japan are the highest in the world?

bull....
26-08-2019, 10:24 AM
looks like the market doesnt like the trade deal ... be under 3 soon i reckon. getting closer to a2 buying them

Chinesekiwi
26-08-2019, 10:29 AM
Really? Do you have an evidence that the agricultural product prices in Japan are the highest in the world?

I don't know if the prices are the highest but I do travel to Japan and Canada regularly. Both highly protected dairy markets. Both are very very expensive places to buy dairy products.

The consumers there are royally rorted.

bull....
26-08-2019, 10:32 AM
I don't know if the prices are the highest but I do travel to Japan and Canada regularly. Both highly protected dairy markets. Both are very very expensive places to buy dairy products.

The consumers there are royally rorted.

yes but the quality in japan is so good

pg0220
26-08-2019, 10:45 AM
I don't know if the prices are the highest but I do travel to Japan and Canada regularly. Both highly protected dairy markets. Both are very very expensive places to buy dairy products.

The consumers there are royally rorted.
I lived there for several months and found it really depends on what you buy. For "agricultural" products, some are definitely more expensive whereas other some are way cheaper there. Dairy products are very expensive there in general but it is because dairy products aren't part of their main diet. From Aeon, which is their Paknsave, 900ml of milk was about 100yen, which is equivalent to 1.5NZD. 2 liters of milk is 3.5NZD from Paknsave so it doesn't seem the "most expensive" price in the world, does it? Any agricultural products related to bean are damn cheap in Japan for example, whereas they are just ridiculously expensive in NZ. True that Japan has a very protected market, but don't think they are ripped off for the agricultural products.

Chinesekiwi
26-08-2019, 11:03 AM
I lived there for several months and found it really depends on what you buy. For "agricultural" products, some are definitely more expensive whereas other some are way cheaper there. Dairy products are very expensive there in general but it is because dairy products aren't part of their main diet. From Aeon, which is their Paknsave, 900ml of milk was about 100yen, which is equivalent to 1.5NZD. 2 liters of milk is 3.5NZD from Paknsave so it doesn't seem the "most expensive" price in the world, does it? Any agricultural products related to bean are damn cheap in Japan for example, whereas they are just ridiculously expensive in NZ. True that Japan has a very protected market, but don't think they are ripped off for the agricultural products.


My comments are related just to dairy.

Agricultural products I have not paid a lot of attention to - though I do pay through the nose for perfect specimens of Zespri Gold!

pg0220
26-08-2019, 11:13 AM
My comments are related just to dairy.

Agricultural products I have not paid a lot of attention to - though I do pay through the nose for perfect specimens of Zespri Gold!
Kiwis are damn expensive Japan.... I never bought it a single time for myself, but only a couple of times for my son while I was there...

bull....
27-08-2019, 07:45 AM
Fermentation might lead to a dairy protein to make fake milk
https://www.stuff.co.nz/business/farming/opinion/115280308/fermentation-might-lead-to-a-dairy-protein-to-make-fake-milk

guess its only a matter of time , disruption just like fake meat etc etc

bull....
27-08-2019, 02:43 PM
share price crashing , suggest some more ugly skeletons still to come out in the wash. partial listing to raise capital would solve a lot of issues

whatsup
27-08-2019, 03:08 PM
With the attitude of cockies towards Fonterra IMHO I cannot see why its S P should be above $2-50 or close to that ATM !

Balance
27-08-2019, 03:13 PM
With the attitude of cockies towards Fonterra IMHO I cannot see why its S P should be above $2-50 or close to that ATM !

Will take Fonterra to go broke before the farmers change their mind about their 'company'.

Sadly, that is already happening right infront of their eyes and they do not see it!

whatsup
27-08-2019, 03:52 PM
IMHO dairy farming is all about capital gains and NOT about marketing, that is ending now as they are increasingly finding it harder and harder to sell their farms.

Beagle
27-08-2019, 04:06 PM
My comments are related just to dairy.

Agricultural products I have not paid a lot of attention to - though I do pay through the nose for perfect specimens of Zespri Gold!
I understand the right to produce Kiwifruit Gold is sold under licence by Zespri and the going rate is close to $300,000 per hectare incl GST.

whatsup
27-08-2019, 04:10 PM
I understand the right to produce Kiwifruit Gold is sold under licence by Zespri and the going rate is close to $300,000 per hectare incl GST.

Yeh but he gets double + the return than what he gets for green K/fruit.

Balance
27-08-2019, 04:21 PM
IMHO dairy farming is all about capital gains and NOT about marketing, that is ending now as they are increasingly finding it harder and harder to sell their farms.

The ban on overseas buyers is definitely having a profound effect on values, likewise the various regulations and impositions by the Greens via lovely Jacinda (she who came from a small town background! :t_up:)

NZSilver
27-08-2019, 05:00 PM
They are going in the right direction, focusing on what fonterra is good at. Price will probably drop a fair bit further though, will be sub 3 soon by the looks

bull....
28-08-2019, 09:07 AM
They are going in the right direction, focusing on what fonterra is good at. Price will probably drop a fair bit further though, will be sub 3 soon by the looks

going in the right direction? selling off all there assets so they will end up with only milk the commodity to sell in a world where milk demand has peaked? and alternatives are on the rise. farmers going bankrupt due to falling land values and what about if the milk price were to drop ? it would be nightmare senario for farmers. $3 not far away now the only option in my view is partial listing and value add strategy in the long run there is no future in the new world for soley commodity players to earn anything but crumbs.

bull....
02-09-2019, 07:38 AM
Financial Markets Authority seeks financial information from Fonterra amid concerns over writedowns and losses


https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12263791


has fonterra been cooking the books to pay a higher milk price? who know only maybe the fma at the end of the day lol but the way the share price been crashing some people must know something

Is this going to be NZ enron moment?

Balance
02-09-2019, 08:37 AM
Financial Markets Authority seeks financial information from Fonterra amid concerns over writedowns and losses


https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12263791


has fonterra been cooking the books to pay a higher milk price? who know only maybe the fma at the end of the day lol but the way the share price been crashing some people must know something

Is this going to be NZ enron moment?

Fonterra has known* for years that their South American operations were in trouble - corruption, nepotism in the local management ranks, inefficiencies and losses piling up.

Yet no action was taken to recognise and down the values as Fonterra was imo hoping for a miracle from its China operations to provide an offset against the South American disasters.

Well, let's hope a few of the directors are given the opportunity to provide some insight into their thinking about why.

* FMA only needs to interview a few exFonterra staff who were seconded to South America to get at the truth - those New Zealanders could not get out of there fast enough. I know one (an engineer) who left in a big hurry - he witnessed the corruption of the government officials (eg. a piece of machinery imported for $1m went up to $1.5m to clear customs and to get delivered to the plant ) and the gross mismanagement & incompetence of the local staff - specifically, whole related families (siblings, uncles, aunties, nephews, distant cousins etc etc) employed in the operations to do bugger all.

Wsp
02-09-2019, 09:46 PM
https://www.interest.co.nz/rural-news/101478/keith-woodford-lays-out-how-fonterra%E2%80%99s-chilean-profits-and-market-share-have-been

Ggcc
03-09-2019, 05:16 AM
https://www.interest.co.nz/rural-news/101478/keith-woodford-lays-out-how-fonterra%E2%80%99s-chilean-profits-and-market-share-have-been
Another nail in the coffin and another interesting fact of the arrogance at the top of this organisation.

whatsup
03-09-2019, 08:54 AM
https://www.interest.co.nz/rural-news/101478/keith-woodford-lays-out-how-fonterra%E2%80%99s-chilean-profits-and-market-share-have-been

Company still run by cockie cockies !

Sideshow Bob
03-09-2019, 11:42 AM
Question is whether the new CEO is getting all of the skeletons out of the cupboard now, and then start with a fresh page for the next year. Pin everything on Theo et al now.

However Fonterra being Fonterra, there is likely to be another cluster still hiding.....

Balance
03-09-2019, 11:47 AM
Question is whether the new CEO is getting all of the skeletons out of the cupboard now, and then start with a fresh page for the next year. Pin everything on Theo et al now.

However Fonterra being Fonterra, there is likely to be another cluster still hiding.....

Fat cats. Management ranks consist of incompetent but well connected individuals on obscene remunerations & benefits - why do you think they pay interns $80k to $100k a year, with benefits?

bull....
04-09-2019, 12:00 PM
Pay and bonuses frozen for Fonterra top brasshttps://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12264735

Had to be done when they are very shortly going to announce a horrific loss.

Balance
04-09-2019, 12:14 PM
Pay and bonuses frozen for Fonterra top brasshttps://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12264735

Had to be done when they are very shortly going to announce a horrific loss.

"According to the 2018 financial report, more than 6000 of Fonterra's 22,000 staff were on salaries of $100,000 and over."

Fonterra has been described by one ex-employee I know as a kingdom with many fiefdoms (production, sub-production, marketing, sub-marketing, corporate, sub-corporate etc etc etc) stretching right across the group - with each fiefdom head paid mega-bucks and to justify & maintain the mega-bucks, paying others big fat salaries too.

Sadly, all shareholders would prefer the 6,000 staff being paid $250,000 or more for delivering exceptional performances, rather than 6,000 staff on more than $100,000 delivering huge horrendous losses.

bull....
06-09-2019, 08:27 AM
Fonterra defers annual results reporting date
https://www.nzx.com/announcements/340448

auditors wont sign of on accounts i reckon , auditors must be worried about blow back from investigations. so result might be heaps worse than reported due to auditors wanting more cover.?

stoploss
06-09-2019, 08:36 AM
Fonterra defers annual results reporting date
https://www.nzx.com/announcements/340448

auditors wont sign of on accounts i reckon , auditors must be worried about blow back from investigations. so result might be heaps worse than reported due to auditors wanting more cover.?
They confirmed previous guidance of -590/-675 mio so maybe not

bull....
06-09-2019, 08:40 AM
They confirmed previous guidance of -590/-675 mio so maybe not

ok maybe its a subsequent event thats happened after balance date and they arguing over inclusion as a note to the accounts.

Wsp
07-09-2019, 03:53 PM
The govt has announced some proposed freshwater regulations. This is probably worth keeping an eye on over the medium term.

Beagle
09-09-2019, 05:09 PM
https://www.msn.com/en-nz/money/news/fonterra-cuts-bonuses-freezes-6000-top-workers-pay/ar-AAGMzsh?ocid=spartandhp

Tough call or not enough ?
If I was a dairy farmer I would be thinking a pay freeze is nothing. I'd be looking for Fonterror to dramatically slim down their overheads and staff numbers.
I hardly think the massive numbers of managers earning $250K plus are doing it tough with just a temporary salary freeze.

RTM
10-09-2019, 08:05 AM
NOT ENOUGH BY A LONG WAY.
But I guess other stuff is also happening.
Welcome back Beagle.



https://www.msn.com/en-nz/money/news/fonterra-cuts-bonuses-freezes-6000-top-workers-pay/ar-AAGMzsh?ocid=spartandhp

Tough call or not enough ?
If I was a dairy farmer I would be thinking a pay freeze is nothing. I'd be looking for Fonterror to dramatically slim down their overheads and staff numbers.
I hardly think the massive numbers of managers earning $250K plus are doing it tough with just a temporary salary freeze.

kiwidollabill
10-09-2019, 08:15 AM
Word in the agri-street is some of the banks are going to start tightening the thumbscrews on some of the more highly leveraged farmers - forced sales potentially on the cards. Impacted by new reserve bank rules.

bull....
11-09-2019, 06:56 AM
Fonterra to shed large number of jobs to balance books
https://www.stuff.co.nz/business/farming/115678601/fonterra-to-shed-large-number-of-jobs-to-balance-books#comments


yep lots of chiefs not enough indians typical bloated corp

bull....
11-09-2019, 09:11 AM
David Hargreaves crunches some numbers around Fonterra and does little to soothe his own anxiety about the future of New Zealand's dairy giant and our dairy industry

https://www.interest.co.nz/opinion/101605/david-hargreaves-crunches-some-numbers-around-ailing-dairy-giant-and-does-little


hope its not NZ version of enron ? only way out is list 49% company to reduce debt or govt bailout i reckon if debt blows out further due to writedowns

horus1
11-09-2019, 09:35 AM
That is a very good write up which is horrifying . Glad I have not bought the shares.

Beagle
11-09-2019, 10:01 AM
Oh my goodness, it looks if those write-downs are even more severe gearing could go up quite substantially, possibly to as much as 60%.
Auditors possibly set to tag the financial statements with fundamental uncertainty if this is a going concern ?
What a mess...
I think really radical change is required and a massive streamlining but I doubt the board or the new CEO will have the foresight to see this or the courage to implement it.

bohemian
11-09-2019, 10:07 AM
The real issue is poor governance and bad decision making over a long period of time made by a board of dubious ability. Blaming staff and making them bear the consequences is unjust and won't rescue Fonterra.

Beagle
11-09-2019, 10:10 AM
The real issue is poor governance and bad decision making over a long period of time made by a board of dubious ability. Blaming staff and making them bear the consequences is unjust and won't rescue Fonterra.

S & P agrees with you 100% http://www.sharechat.co.nz/article/4a3f549d/s-p-says-fonterra-s-restructuring-is-a-painful-step-toward-recovery.html?utm_medium=email&utm_campaign=SP%20says%20Fonterras%20restructuring %20is%20a%20painful%20step%20toward%20recovery&utm_content=SP%20says%20Fonterras%20restructuring% 20is%20a%20painful%20step%20toward%20recovery+CID_ e19a14ce68c807e9a0279f99a650ca4d&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle4a3f549ds-p-says-fonterra-s-restructuring-is-a-painful-step-toward-recoveryhtml

bohemian
11-09-2019, 10:24 AM
The real problem lies with the very nature of Fonterra as a quasi co operative causing the fundamental conflict of interest, meeting the payout demands of its shareholder farmers and its serious need for capital. Can't help compare Fonterra with A2 or say FPH who both have little or no divi return to share holders because they need to retain capital for growth.

Beagle
11-09-2019, 10:53 AM
https://www.interest.co.nz/rural-news/101539/anz-agriculture-economist-susan-kilsby-thinks-fonterra-may-have-make-still-further

bull....
11-09-2019, 11:16 AM
https://www.interest.co.nz/rural-news/101539/anz-agriculture-economist-susan-kilsby-thinks-fonterra-may-have-make-still-further

are any of those businesses really viable long term? if not there worth next to nothing

RTM
11-09-2019, 12:11 PM
That is a very good write up which is horrifying . Glad I have not bought the shares.

Agreed. Unfortunately I have a modest quantity.
I wonder where the Auditors have been on this ? This hasn't all happened in the last 12 months that they need these HUGE write-offs.

Beagle
11-09-2019, 12:37 PM
are any of those businesses really viable long term? if not there worth next to nothing

Who knows ? A relativly simple business of collecting and processing dairy milk from N.Z. suppliers and adding value by turning it into other products like ice-cream, yogurt, milk powder and cheese has been turned into some dysfunctional multinational behemoth at the behest of so called expert executives paid millions per annum.
This is a ****-up of cataclysmic proportions and its completely uninvest-able in my opinion.

macduffy
11-09-2019, 03:37 PM
And others also finding that dairying's tough going at present.

https://www.abc.net.au/news/2019-09-11/brancourts-dairy-processor-goes-into-administration/11499442?section=business

RTM
11-09-2019, 07:51 PM
And others also finding that dairying's tough going at present.

https://www.abc.net.au/news/2019-09-11/brancourts-dairy-processor-goes-into-administration/11499442?section=business

Yes....and with the Fonterra share price.....and perhaps needing to destock somewhat....I think "our" banks will be needing to pull the pin on a few farmers. Especially recent conversions. On top of this....if Fonterra is in as much trouble as we suspect...how can they sustain the generous milk price ? Rocky road ahead. China might pick up another low cost asset. Let them do it and then switch everything to horticulture / or forestry.

bull....
12-09-2019, 10:02 AM
Australian dairy processor Brancourts goes into voluntary administration after 124-year run

Ms Symes said reduced national milk volume was driving increased competition among dairy processors to secure supply for their factories


https://www.abc.net.au/news/2019-09-11/brancourts-dairy-processor-goes-into-administration/11499442?section=business


guess with increased chinese factories in NZ this is a potential risk for fonterra in the future

Sideshow Bob
12-09-2019, 10:23 AM
Australian dairy processor Brancourts goes into voluntary administration after 124-year run

Ms Symes said reduced national milk volume was driving increased competition among dairy processors to secure supply for their factories


https://www.abc.net.au/news/2019-09-11/brancourts-dairy-processor-goes-into-administration/11499442?section=business


guess with increased chinese factories in NZ this is a potential risk for fonterra in the future

Dairy factories would have a huge amount of fixed cost, and an asset that isn't valuable as anything else. Better to try and fill up your plant to average down your fixed costs.

Race to the bottom...

bull....
13-09-2019, 10:05 AM
looks like the share price is going to close the week at fresh all time lows

Beagle
13-09-2019, 11:43 AM
2 year chart is quite "the downtrend"
Only the VERY brave need apply !

Timesurfer
13-09-2019, 08:26 PM
More unhappy news from across the ditch.
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/aussie-farmers-desert-fonterra

Victoria farmer Mark Billing, who stopped supplying Fonterra from July 1, told Rural News the long term viability of the company in Australia “is starting to worry us”

bull....
18-09-2019, 06:21 AM
More unhappy news from across the ditch.
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/aussie-farmers-desert-fonterra

Victoria farmer Mark Billing, who stopped supplying Fonterra from July 1, told Rural News the long term viability of the company in Australia “is starting to worry us”


and more bad news

Fonterra’s milk slide worsens in Oz
Fonterra’s Australian milk collection in July was down nearly 30%.

https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/fonterra-s-milk-slide-worsens-in-oz


there abandon aus soon i reckon , the chinese will scoop up the distressed assets

macduffy
19-09-2019, 10:47 AM
No need to shout, bull. A lot of us would agree that Fonterra is best out of Aussie in present circumstances - both Fonterra's and Aust dairy industry's.

Sideshow Bob
23-09-2019, 10:17 AM
Prof Keith's latest. Page 35

https://issuu.com/farmersweeklynz/docs/fw_23-09_issuu/1?ff&showOtherPublicationsAsSuggestions=true

RTM
23-09-2019, 12:13 PM
Prof Keith's latest. Page 35

https://issuu.com/farmersweeklynz/docs/fw_23-09_issuu/1?ff&showOtherPublicationsAsSuggestions=true

What a shambles....and with our biggest company. Not good.
Thanks for posting the link.
RTM

bull....
25-09-2019, 06:47 AM
the disrupters keep coming

The development of cell-based cultured proteins is interesting because it is around powders and commodity dairy, Bosworth says

https://www.stuff.co.nz/business/115199256/milk-powder-without-cows-joins-animalfree-mega-trend


tomorrow big day , hope there strategy is good

Sideshow Bob
25-09-2019, 08:19 AM
https://www.nzx.com/announcements/341549

Selling more of the silverware. Pity they didn't announce a billion dollars in profit...…;)

bull....
25-09-2019, 08:25 AM
https://www.nzx.com/announcements/341549

Selling more of the silverware. Pity they didn't announce a billion dollars in profit...…;)

shame they are selling out of value add business with way better growth prospects because they dont have the capital to invest.

Beagle
25-09-2019, 08:29 AM
https://www.nzx.com/announcements/341549

Selling more of the silverware. Pity they didn't announce a billion dollars in profit...…;)

Tip Top was probably one of their best assets...seems such a shame to see a company of this former standing in such a mess.

kiwijay
26-09-2019, 06:38 AM
Doomsday today, wonder how much worse it could go?

Dassets
26-09-2019, 08:00 AM
Fonterra this am was a shocker. Not for the loss(which is bad enough) but what the CEO said. Blaming the realities of asset values and various divisions for the tough times is a joke. The reality is the problem is the people. This new CEO blames everything but the people. IMO nothing really will change at this time until the company understands why it has failed.

bull....
26-09-2019, 08:10 AM
loss no surprise , but im sure there will be more right downs coming and gearing level blow out as a consequence.

strategy is more akin to a company in retreat from overseas . focus on debt reduction , asset sales , cost cutting. the only positive was there interest in keeping high value sectors but unfortunately not having any capital to grow these sectors means very little growth to come highlighted by there financial outlook for minimal growth in margins and revenue.

all in all look really like they havnt learnt anything except to focus paying everything in milk payout to farmers. be interesting what happens when the milk price fall of a cliff one day. not having the capital to expand the value add will leave them wanting now.

whatsup
26-09-2019, 08:36 AM
IMHO The fundamental problem, with Fonterra is the Co-op legislation , IMHO nothing will improve until they reform under a company structure where they only payout 70-80% of their milk fat price to their suppliers, imo dairy farmers do not care about the business of Fonterra just as long as they receive all of what they think they deserve to carry on their capital gains tax free farming and let Fonterra survive as best as it can in its own .

If this was a company it would have come back to its shareholders ( farmer suppliers ) for a cash issue ( 1 billion dollars ) to recapitalise itself instead of selling its company jewels

Beagle
26-09-2019, 09:27 AM
Fonterra this am was a shocker. Not for the loss(which is bad enough) but what the CEO said. Blaming the realities of asset values and various divisions for the tough times is a joke. The reality is the problem is the people. This new CEO blames everything but the people. IMO nothing really will change at this time until the company understands why it has failed.

I haven't had time to read it yet but if they're not acknowledging and owning their own part in the problems they're facing I'm inclined to think that is just as shocking as the loss itself.

Southern_Belle
26-09-2019, 10:43 AM
I haven't had time to read it yet but if they're not acknowledging and owning their own part in the problems they're facing I'm inclined to think that is just as shocking as the loss itself.
Apparently not owning the problems...... Global Operating Officer resigns & Christina Zhu may apply or the job .....Christina is the current China president and responsible for the due diligence on the Beingmate investment...... how on earth does she still have a job with Fonterra .... Fon-Terror

RTM
26-09-2019, 11:23 AM
Font-Error

macduffy
26-09-2019, 12:53 PM
strategy is more akin to a company in retreat from overseas .

Known as the "Dunkirk strategy".

;)

theace
26-09-2019, 12:54 PM
So on this morning's not-so-great news, why is FSF on the up? .... The skeletons are out of the closet, hence only way is up?

Southern_Belle
26-09-2019, 01:22 PM
ATM might be able to use their cash reserves to purchase Fonterra if the price keeps dropping

Beagle
26-09-2019, 01:37 PM
Apparently not owning the problems...... Global Operating Officer resigns & Christina Zhu may apply or the job .....Christina is the current China president and responsible for the due diligence on the Beingmate investment...... how on earth does she still have a job with Fonterra .... Fon-Terror

The mind boggles.

kiwidollabill
26-09-2019, 02:11 PM
I dont think they really had much choice.

You look at the business and see what their strategic capabilities (inc the experience with the people they have). They are really good at manufacturing powder and selling it as commodities/ingredients and not very good at consumer products or value add..... They have little ability to generate the capital to become good at the value-add so will stick to the knitting...

There goes the 'national champion'.....

peat
26-09-2019, 07:15 PM
I just couldnt believe it when i read this

Fonterra confident its got the strategy right

http://www.sharechat.co.nz/article/2e4c9c0e/fonterra-confident-its-got-the-strategy-right.html?



the audacity of them to use that phrase...

bull....
27-09-2019, 08:10 AM
I just couldnt believe it when i read this

Fonterra confident its got the strategy right

http://www.sharechat.co.nz/article/2e4c9c0e/fonterra-confident-its-got-the-strategy-right.html?



the audacity of them to use that phrase...

time will tell , but going back to predominetly being a commodity producer dooms them to failure in the long run , the chinese factories being built and taken over will eat fonterra lunch over time due to there deeper pockets. fonterra biggest hinderance is there lack of capital and failure to address the issue is there biggest mistake which will lead to there demise over time due to the fact they do not have the capital to grow value add bussiness which is needed to subsidize the milk payout when the milk price drops.

failure by management and failure by govt in not protecting the dairy industry under national security grounds lol really i mean in the nations interest from overseas companies is leading to its demise.

macduffy
27-09-2019, 07:22 PM
The market appears to have taken heart from the recent announcement and new(?) strategic direction. Rather ironic though inasmuch as future returns from FSF units depends on profits from the value-added activities that Fonterra has either sold or plans to curtail in future.

nizzy
30-09-2019, 10:41 AM
I dont think they really had much choice.

You look at the business and see what their strategic capabilities (inc the experience with the people they have). They are really good at manufacturing powder and selling it as commodities/ingredients and not very good at consumer products or value add..... They have little ability to generate the capital to become good at the value-add so will stick to the knitting...

There goes the 'national champion'.....
Ingredients are value add of course, always have been. Most of the world's food industry is engaged in manufacturing ingredients of one sort or another. Specialisation. Long time solid earner for NZ dairy companies & we are good at it. Good to see renewed focus on this & food service.

Sideshow Bob
30-09-2019, 02:13 PM
https://issuu.com/farmersweeklynz/docs/fw_30-09_issuu/1?ff&showOtherPublicationsAsSuggestions=true

Prof Keith's latest - page 25.

bull....
07-10-2019, 08:29 AM
Bega management will be keeping a close eye on the fate of the Lion dairy assets and on Fonterra’s future in Australia in the next few months.

The Kiwi dairy giant has already lost so much milk supply in Australia that it has closed the Dennington plant in Victoria and has others running below capacity

https://www.afr.com/companies/agriculture/bega-trying-to-make-best-of-a-bad-situation-20191004-p52xq4

JimmyTrade
07-10-2019, 12:37 PM
Ingredients are value add of course, always have been. Most of the world's food industry is engaged in manufacturing ingredients of one sort or another. Specialisation. Long time solid earner for NZ dairy companies & we are good at it. Good to see renewed focus on this & food service.

This is true, without commodity's there isn't value added products, these are the ingredients of the value added products (whole milk, whey protein, casein, lactoferrin etc).

Trying to chase/predict markets for value added products can be an expensive and lackluster venture.

Sideshow Bob
08-10-2019, 08:14 AM
A Mercury announcement, but probably more relevant to Fonterra and becoming the new COO...…

https://www.nzx.com/announcements/342254

winner69
08-10-2019, 02:02 PM
How’s what one of our population thinks of Whineray’s appointment

@astropuss
AWESOME! Another multi-million dollar job for a faceless, cookie-cutter white guy ����

stef
08-10-2019, 07:00 PM
Reaĺly? Seems like the right man for the job given his background. Hope it's the start of improvements at fonterra

macduffy
21-10-2019, 03:13 PM
I don't rate Fonterra's management or business but I reckon they have a point here.

http://www.sharechat.co.nz/article/37e578f0/fonterra-seeks-further-changes-to-dairy-act.html

Sideshow Bob
22-10-2019, 07:34 AM
At least it is looking better for their farmers. Between currency and interest rates, must give them a bit of a boost

https://www.nzx.com/announcements/342997

RTM
22-10-2019, 08:07 AM
At least it is looking better for their farmers. Between currency and interest rates, must give them a bit of a boost

https://www.nzx.com/announcements/342997

Yes. I wonder when some of this will come to unit holders. Rather than just the suppliers.

winner69
22-10-2019, 08:11 AM
Yes. I wonder when some of this will come to unit holders. Rather than just the suppliers.

You’ll get your share from all the value add they are achieving

Sideshow Bob
22-10-2019, 08:17 AM
You’ll get your share from all the value add they are achieving


Will that be the same share unit holders are getting now??
:scared:;) :mellow::(

RTM
22-10-2019, 12:58 PM
You’ll get your share from all the value add they are achieving

Thanks Winner, that’s very reassuring.

macduffy
23-10-2019, 03:12 PM
At least it is looking better for their farmers. Between currency and interest rates, must give them a bit of a boost

https://www.nzx.com/announcements/342997

Yes, it's still all about the Farmgate Milk Price, makes it even harder to earn a dollar on value-added products?

bull....
24-10-2019, 02:55 PM
time will tell , but going back to predominetly being a commodity producer dooms them to failure in the long run , the chinese factories being built and taken over will eat fonterra lunch over time due to there deeper pockets. fonterra biggest hinderance is there lack of capital and failure to address the issue is there biggest mistake which will lead to there demise over time due to the fact they do not have the capital to grow value add bussiness which is needed to subsidize the milk payout when the milk price drops.

failure by management and failure by govt in not protecting the dairy industry under national security grounds lol really i mean in the nations interest from overseas companies is leading to its demise.

see fonterra realising what i was saying will happen in the long run

Fonterra raises alarm over factory closures if rules don't change
https://www.stuff.co.nz/business/farming/116880363/fonterra-raises-alarm-over-factory-closures-if-rules-dont-change

bull....
13-11-2019, 04:48 AM
Dean Foods, America’s biggest milk producer, files for bankruptcy


https://www.cnbc.com/2019/11/12/dean-foods-americas-biggest-milk-producer-files-for-bankruptcy.html


yep another one bites the dust in the ongoing death of traditional milk processors. just goes to show if you dont move up the value chain your days are numbered


The 94-year-old company has struggled in recent years because Americans are drinking less cows milk

https://edition.cnn.com/2019/11/12/business/dean-foods-bankruptcy/index.html

nizzy
14-11-2019, 07:26 PM
Dean Foods, America’s biggest milk producer, files for bankruptcy


https://www.cnbc.com/2019/11/12/dean-foods-americas-biggest-milk-producer-files-for-bankruptcy.html

yep another one bites the dust in the ongoing death of traditional milk processors. just goes to show if you dont move up the value chain your days are numbered


The 94-year-old company has struggled in recent years because Americans are drinking less cows milk

https://edition.cnn.com/2019/11/12/business/dean-foods-bankruptcy/index.html

Dean Foods has struggled for years. One big challenge in the US liquid milk market has been the big drop in breakfast cereal consumption, replaced by instant breakfasts that don't need milk. Mitigating this is the rise in out of home dairy consumption eg Starbucks(milk&cream), burgers(cheese), pizza (mozza) etc etc. But this is no help if you are stuck with a complex cold chain set up to deliver liquid milk to families via supermarkets.

bull....
25-11-2019, 10:39 AM
chinese mengnui snapping up australian dairy assets. just purchased ballamys now Kirin to sell Australian dairy unit to Mengniu



So we got 2 major chinese dairy companies 1 in NZ and another in australia obviously looking to become leaders in the space

https://asia.nikkei.com/Business/Business-deals/Kirin-to-sell-Australian-dairy-unit-to-Mengniu#:~:targetText=TOKYO%20%2D%2D%20Kirin%20Hol dings%20plans,in%202020%2C%20Nikkei%20has%20learne d.

bull....
20-12-2019, 05:11 AM
good to see this move

Fonterra pays $30m for almost full control of Chilean milk processorhttps://www.newsroom.co.nz/2019/12/19/956989/fonterra-pays-30m-for-almost-full-control-of-chilean-milk-processor

kiora
04-04-2020, 05:46 AM
Crazy world good for Fonterra
https://www.reuters.com/article/us-health-coronavirus-dairy-insight/u-s-dairy-farmers-dump-milk-as-pandemic-upends-food-markets-idUSKBN21L1DW

kiora
06-04-2020, 05:46 AM
Cheese & milk demand up over 50%
https://finance.yahoo.com/news/how-the-coronavirus-is-impacting-egg-dairy-demand-in-america-200718960.html

kiora
08-04-2020, 03:23 AM
Chinese Gvt food guidelines
https://www.foodnavigator-asia.com/Article/2020/03/17/Fight-COVID-19-with-dairy-China-industry-associations-issue-consumption-guidelines-to-build-immune-resistance#

RTM
08-04-2020, 11:55 AM
Not a huge increase.....but not down either. And volumes OK
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12323370
"Dairy prices lift for first in five auctions"

Combined with an attractive exchange rate...got to be good news for Fonterra etc.

jorge_telosa
18-09-2020, 07:45 AM
Solid performance of Fonterra despite Covid19.

Annual Results Summary
• Final cash payout for 2019/20 season: $7.19 per kgMS
o Final 2019/20 Farmgate Milk Price: $7.14 per kgMS
o 2019/20 dividend: 5 cents per share
• Reported Profit After Tax: $659 million, up $1.3 billion
• Normalised Profit After Tax*: $382 million, up $118 million
• Total Group Earnings Before Interest and Tax (EBIT): $1.1 billion, up $1.2 billion
• Total Group normalised EBIT: $879 million, up $67 million
• Total Group normalised gross profit: $3.2 billion, up $200 million
• Total Group normalised operating expenses: $2.3 billion, down $14 million
• Free cash flow: $1.8 billion, up $733 million
• Net debt**: $4.7 billion, down $1.1 billion
• Debt to EBITDA ratio: 3.4x improved from 4.4x
• Full year normalised earnings per share: 24 cents
• 2020/21 forecast Farmgate Milk Price range: $5.90 - $6.90 per kgMS. Mid-point of $6.40 per kgMS
• 2020/21 forecast earnings: 20 – 35 cents per share

SSB11
18-09-2020, 08:31 AM
very solid.. and ongoing outlook looks very strong.

tomm
18-09-2020, 08:54 AM
Do they give divident for FSF ?

arekaywhy
18-09-2020, 09:05 AM
Do they give divident for FSF ?

Haven't recently

JimmyTrade
18-09-2020, 09:22 AM
The tickers for Fonterra FSF and FCG what is the difference ?

mike2020
18-09-2020, 02:34 PM
FCG you supply milk FSF you are a unit holder. They paid well enough once. I was a dairy farmer now I wonder if I should be holding much longer. I do believe in current management and they have a goal but do I have the patience. I figured being down they had more upside than a lot of other things.

arekaywhy
22-10-2020, 01:03 PM
Share price sneaking up I see. Any ideas as to motivation for that? Dairy auction price?

mike2020
22-10-2020, 01:14 PM
Share price sneaking up I see. Any ideas as to motivation for that? Dairy auction price?

A higher milk price puts pressure on earnings, there's a date when you have to be fully shared up by which from memory is end of or start of nov so anyone who needs to top up for supply tends to buy around now and convert to FCG

RTM
25-02-2021, 08:41 AM
Good news...Dollar won't be helping them a lot. Nearly breaking even -1.3%. Been a bit of a grind.

https://www.nzx.com/announcements/368169

Gerald
03-03-2021, 12:07 PM
https://www.globaldairytrade.info/en/product-results/whole-milk-powder/

https://www.stuff.co.nz/business/farming/124415575/dairy-prices-leap-15-but-dont-go-and-buy-a-new-range-rover-just-yet-one-farmer-says

Pretty impressive.

RTM
04-03-2021, 08:45 AM
https://www.globaldairytrade.info/en/product-results/whole-milk-powder/

https://www.stuff.co.nz/business/farming/124415575/dairy-prices-leap-15-but-dont-go-and-buy-a-new-range-rover-just-yet-one-farmer-says

Pretty impressive.

Yes. Now down just -0.9%. Hoping that turns positive today.
Lucky the COVID slump let me average down significantly.

RTM
05-03-2021, 12:21 PM
Yes. Now down just -0.9%. Hoping that turns positive today.
Lucky the COVID slump let me average down significantly.

And on this down day...while waiting for the tsunami to roll up the estuary....I am finally in positive territory.
I bet you are all happy for me !

Gerald
05-03-2021, 12:59 PM
Outperforming the index by over 24% so far this year, some speculation that demand from farmers for more wet shares to take advantage of the high milk prices might be contributing, despite the strong GDT results being poor news for profits, debt reduction and dividends.

winner69
17-03-2021, 07:46 AM
From the NZX 'Results for Announcement to Market' form -


Net profit/(loss) from continuing operations $339m (44)%


Does this mean Fonterra's profits from what they have left were down 44% - jeez

Gerald
17-03-2021, 08:53 AM
From the NZX 'Results for Announcement to Market' form -


Net profit/(loss) from continuing operations $339m (44)%


Does this mean Fonterra's profits from what they have left were down 44% - jeez


Only had a quick look, but you probably want to look at the normalised income statement from continuing operations.

In HY21 if you add back in the Beingmate impact you get a PBT from continuing operations of 514m.

In HY20 if you remove all the impairments and gains on sales you get a PBT from continuing operations of 400m.

Pg 30/31 of income statement.

I know all the normalisations adjustments are real gains/losses, however the above numbers are probably a more accurate representation of how Fonterra performed in the period. Gross profit slightly higher but still looks to have done better in a comparative sense.

Davexl
09-04-2021, 03:34 PM
Fonterra is still accepting milk from these incompetent foreign owned Aust farms and farm managers - surely unacceptable...

https://www.smh.com.au/business/companies/chinese-owner-s-catastrophic-failure-drives-australia-s-biggest-dairy-farm-into-the-ground-20210406-p57gts.html

winner69
05-05-2021, 09:08 AM
From the guy at Hamilton, Hinden Green

@G_T_Davies
Pure guess, but the @Fonterra announcement this morning does not sounds like good news for the Fonterra Shareholders Fund...

Habits
05-05-2021, 09:24 AM
From the guy at Hamilton, Hinden Green

@G_T_Davies
Pure guess, but the @Fonterra announcement this morning does not sounds like good news for the Fonterra Shareholders Fund...

Its good news if FCG buy back the FSF units at an incrememt to current sp. However i like having the units as it gives transparency to value and easy trading ability for farmers

Mrbuyit
05-05-2021, 09:59 AM
My mate miles sent out a very vague email to employees which said it's about a board led consultation /discussion about farmers capital debt /equity ratios and level of non-farmer investment they should be willing to allow..
Announcement tomorrow halt through to Friday..

Could be the winding up of the FSF perhaps?

Sideshow Bob
06-05-2021, 07:37 AM
Fonterra starts consultation on capital structure options - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/371730)

Fonterra starts consultation on capital structure options
Today Fonterra is starting a consultation process to seek farmer feedback on potential options to change its capital structure that could give farmers greater financial flexibility.
To allow its farmers to have open conversations and consider all options during consultation, the Co-operative is temporarily capping the size of the Fonterra Shareholders’ Fund (the Fund) by suspending shares in the Fonterra Shareholders’ Market (FSM) from being exchanged into units in the Fund.
This temporary cap will be effective once the current trading halt is lifted when the market opens tomorrow and will remain throughout the consultation process.
Chairman Peter McBride says the capital structure review seeks to ensure the sustainability of the Co-operative into the future.
“The Co-op’s future financial sustainability relies heavily on our ability to maintain a sustainable New Zealand milk supply and protect farmer ownership and control.

“The decisions we’ve already taken in response to the findings of the review – like temporarily capping the size of the Fund – haven’t been made lightly. We appreciate they will have come as a surprise, but they are necessary to keep all our options open while the Co-op’s farmer shareholders have a free and frank conversation about our capital structure,” says Mr McBride.
Some of the options the Co-operative is asking its farmers to consider include buying back the Fund. If the temporary cap was not in place, anyone holding ‘dry shares’ – those shares held in excess of the ‘wet share’ requirement linked to milk production – would have been able to exchange them into units in the Fund during consultation. This could have more than doubled the size of the Fund and made the option of buying it back unaffordable in the context of the Co-operative’s current balance sheet targets.
Capital structure options the Co-op is consulting on
The Fonterra Board has spent a significant amount of time looking at a wide range of options, including staying with the current structure. Some of the alternative structures they’ve considered include:
- dual share structures, which would move from the current single Co-operative share to a compulsory supply share and a separate non-compulsory investment share
- unshared supply structures
- a traditional nominal share structure
- a split co-operative model
All options are explained in the attached booklet, which all Fonterra farmers will be receiving as part of the consultation.
After its analysis to date, and to help give the conversations with farmers some structure, the Board has put forward a preferred option – a “Reduced Share Standard with either No Fund or a Capped Fund.”
“We believe the best option for our Co-op is to move to a structure that reduces the number of shares a farmer would be required to have and either removes the Fund or caps it from growing further, to protect farmer ownership and control,” says Mr McBride.
Under this option, the minimum requirement for farmer owners would be one share for every four kgMS supplied to the Co-op, compared with the current requirement of one share for every kgMS supplied. At the other end of the scale, farmers could hold shares up to a maximum of four times their milk supply. But farmers will be encouraged to share their views on these and other features.

“This would make it easier for new farmers to join the Co-op and give more flexibility to existing farmers who may want to free up capital or who are working through succession.
  
“A key outcome of this change is that shares would be bought and sold between farmers in a farmer-only market.
“I want to be clear that these changes could impact the price at which shares in our Co-op are traded, and there may not be as much liquidity in the market. Ultimately the price for farmers’ shares would be determined by the performance of the Co-op and trading between farmers.
“We believe this is a more sustainable proposition over the longer term than the alternatives we are confronted with.
“This is the Board’s current thinking, but we are open minded about adjusting that direction based on farmer feedback on any of the options. We want to hear from as many of our farmers as possible. I strongly encourage all farmers to consider the information provided and participate in the consultation process that started today and continues over the coming months.”
Why the Co-op is looking at alternative capital structure options
Fonterra says the environment it is operating in has changed a lot over the last ten years. The Co-operative’s current structure was put in place when milk supply was growing rapidly in New Zealand. It now needs to be prepared for flat or potentially declining milk supply as a result of factors such as climate change impacts, regulatory changes, and alternative land uses.
“Our Co-op’s financial performance will always be the main determinant of our share of New Zealand milk. But we also know that a more flexible capital structure, that caters for the diversity and different aspirations within our Co-op, would support a sustainable future milk supply. This is critical for us to deliver our strategy, which prioritises New Zealand milk.”
Fonterra says declining milk volumes or more flexibility for farmers’ shareholding requirements could cause the Fund size to grow significantly. That would mean the thresholds that were put in place to help protect farmer ownership and control could be exceeded within the next few seasons.
“To stay within the Fund size thresholds, our Co-op would need to take action – such as buying back shares or units or increasing the thresholds to allow a greater degree of external investment. We don’t think either of these are ideal outcomes.
“Buy-backs create an uncertain demand on our capital, potentially impacting our ability to invest in strategy and growth. Under the scenarios that we’ve modelled, buy-backs could cost shareholders up to $1.2 billion over the next ten seasons.”
Next steps
Over the coming months, the Co-operative’s farmers will have the chance to share their views through a series of meetings, webinars and other opportunities – and if the appetite for change remains – the Board will do further work to refine the preferred option or options and have a second round of consultation. If the Board decides to seek change to the Co-operative’s capital structure, it would likely aim for a farmer vote around the time of the Annual Meeting in November and the approval of 75% of votes from voting farmers would be required.
If the preferred outcome is to buy back the Fund, it would also require the approval of 75% of votes from voting unit holders.
As some aspects of Fonterra’s current capital structure are reflected in the Dairy Industry Restructuring Act 2001 (DIRA), any vote is likely to be conditional on any necessary changes to legislation being passed. The DIRA enabled Fonterra to be formed so that an efficient co-operative of scale could lead New Zealand into global markets. The value Fonterra creates is returned to regional New Zealand, where it plays a strong role helping to sustain local communities and enhance their wellbeing.

“I appreciate there is a real sense of optimism in the Co-op with our improving financial performance and how we are travelling generally.
“But the issues raised through this review need to be addressed early. Waiting for the problem to be at our feet will limit our options and likely increase the cost of addressing them, at the expense of future opportunities for us,” adds Mr McBride.
Other notes of importance
• Share Standard compliance obligations for the 2021/22 season are now temporarily on hold for all supplying farmers holding a minimum of 1,000 shares and exiting farmers that are selling shares over three seasons in accordance with the Constitution – until a date to be advised. This is due to the uncertainty around what changes, if any, may occur to the Co-operative’s capital structure. The date for resuming Share Standard compliance obligations will not be earlier than six months after the Co-operative has implemented a new capital structure or made an announcement that the capital structure review is not proceeding for the time being.
• The formal Compliance Date for the 2021/22 season has been set as 20 April 2022, which is consistent with previous seasons. However, as explained above, farmers holding a minimum of 1,000 shares will not be required to comply with the Share Standard for the 2021/22 season until a date to be advised.
• Compliance obligations are also temporarily on hold for those farmers who have not yet met their Share Standard compliance obligations for the current 2020/21 season. This is so that no farmers are required to trade for compliance purposes during the temporary cap, until a date to be advised.

• For contract suppliers, the purchase of units under the Contract Fee for Units Trust will also be put on hold while the temporary cap is in place or until such date as the Board advises.
• Shares in the FSM still have the same core rights as they did before the temporary cap. This includes rights to receive any dividends.
• During the temporary cap, the prices for units in the Fund and shares in the FSM may not be as closely aligned as they have been to date.
• Even if a price difference does emerge, given that no additional shares have been issued, the
Co-operative’s value on a per share basis has not been diluted.
• Also, because the compliance obligations for farmers holding at least 1,000 shares have been put on hold, there may be lower levels of trading. However, farmers will still be free to buy and sell shares in the FSM. The market maker, or registered volume provider, that has been active in making bids and offers on a minimum number of shares in the FSM since our current structure was implemented will continue to operate in the FSM, but the share price could move more on small volumes of trading in the FSM.
• Anyone holding units in the Fund, which may include farmers, will be free to continue buying and selling units on the NZX or ASX given the temporary cap only applies to the exchange of shares in the FSM into units.
Further information is available at www.fonterra.com/capitalstructure
Attachments
• Presentation
• Consultation Booklet
• Frequently Asked Questions
-ENDS-

Sideshow Bob
06-05-2021, 07:38 AM
Initial FSF response to Fonterra Capital Structure Review

6/5/2021, 8:35 amGENERAL6 May 2021

Initial response of Fonterra Shareholders’ Fund to Fonterra Capital Structure Review

FSF Management Company Limited, manager of the Fonterra Shareholders’ Fund, notes that Fonterra has announced a consultation process with its farmer owners on Fonterra’s capital structure review. The materials are available from www.fonterra.com/capitalstructure (http://www.fonterra.com/capitalstructure).

While this consultation process is underway, Fonterra has temporarily capped the size of the Fund by suspending shares in the Fonterra Shareholders’ Market from being exchanged into units in the Fund. As at 4 May 2021, the Fund had approximately 107.2 million units on issue, market capitalisation of around NZD 493 million, and is a constituent in the S&P/NZX 50 index.

The manager has formed a subcommittee comprising solely its independent directors to consider the implications of the review for unit holders.
The manager has not been directly involved in Fonterra’s review, or Fonterra’s decision to exercise a discretion Fonterra has under Fonterra’s constitution and related arrangements by applying the temporary cap. However, Fonterra has confidentially briefed the manager subcommittee ahead of its announcement.

While the consultation is underway FSF units will continue to trade on the NZX and ASX, and FSF units continue to have the same rights to participate in the economic performance of Fonterra.

Fonterra’s consultation process is expected to take several months. If there are indications of sufficient farmer support, Fonterra aims for a refined proposal to be voted on by Fonterra shareholders at their annual meeting in November 2021. Implementation of a supportive farmer vote is expected to be conditional upon necessary changes to the Dairy Industry Restructuring Act 2001 being passed.

Fonterra has signalled a preferred option which would see the Fund bought back and removed, or an alternative with the size of the Fund permanently capped. A buyback would require a buyback price to be negotiated between the manager subcommittee and Fonterra, for the manager to make a recommendation to unit holders, and the approval of 75% of votes of voting unit holders at a meeting called for that purpose.

The manager subcommittee has appointed specialist advisers Simmons Corporate Finance and Chapman Tripp to assist with its deliberations over coming months.

John Shewan
Chair
FSF Management Company Limited
Manager of the Fonterra Shareholders’ Fund