New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

Fonterra Shareholders Fund / Equity Bottom-Up

<ul><li>Fonterra (FSF) has lifted its FY26 EPS guidance by +13% at the midpoint to a revised range of between 60cps and 70cps.</li><li>Our confidence in FSF's FY28 EBIT target of ~NZ$1.7bn continues to build, with the top end of FY26 guidance suggesting it could achieve this level of profitability this year.</li><li>FSF has maintained its Farmgate Milk Price (FGMP) forecast for the 2025/26 season at NZ$9.70/kgMS, with a narrowed range of NZ$9.60 to NZ$9.80 (previously NZ$9.40 to NZ$10.00).</li></ul>

Fonterra (FSF) has lifted its FY26 EPS guidance by +13% at the midpoint to a revised range of between 60cps and 70cps.Our confidence in FSF's FY28 EBIT target of ~NZ$1.7bn continues to build, with the top end of FY26 guidance suggesting it could achieve this level of profitability this year.FSF has maintained its Farmgate Milk Price (FGMP) forecast for the 2025/26 season at NZ$9.70/kgMS, with a narrowed range of NZ$9.60 to NZ$9.80 (previously NZ$9.40 to NZ$10.00).

<ul><li>Fonterra (FSF) has provided a positive Q3 trading update this morning, with FY26 EPS guidance lifted +13% at the midpoint to between 60cps and 70cps (previously 50cps to 65cps).</li><li>FSF has maintained its FGMP forecast for the 2025/2026 season at NZ$9.70 at the midpoint, with a narrowed range of NZ$9.60 to NZ$9.80.</li><li>FSF reported underlying earnings of 57cps through the first nine months of FY26, which is tracking +8% ahead of the same period in FY25.</li></ul>

Fonterra (FSF) has provided a positive Q3 trading update this morning, with FY26 EPS guidance lifted +13% at the midpoint to between 60cps and 70cps (previously 50cps to 65cps).FSF has maintained its FGMP forecast for the 2025/2026 season at NZ$9.70 at the midpoint, with a narrowed range of NZ$9.60 to NZ$9.80.FSF reported underlying earnings of 57cps through the first nine months of FY26, which is tracking +8% ahead of the same period in FY25.

Fonterra (FSF): Q3 Update And Guidance Upgrade

Macroeconomics

<ul><li>There is a ~65% probability of an El Niño event developing by the end of July 2026 with a strong likelihood that it develops into a ‘strong’ event by spring, peaking by the end of this year.</li><li>We see the potential earnings impact on NZX listed companies as minor, though think the risk premium for exposed names is likely to increase.</li><li>If a strong El Niño event leads to a meaningful deterioration in agricultural production, this could weigh on the domestic growth outlook and add to the risk of a more stagflationary economic environment.</li></ul>

There is a ~65% probability of an El Niño event developing by the end of July 2026 with a strong likelihood that it develops into a ‘strong’ event by spring, peaking by the end of this year.We see the potential earnings impact on NZX listed companies as minor, though think the risk premium for exposed names is likely to increase.If a strong El Niño event leads to a meaningful deterioration in agricultural production, this could weigh on the domestic growth outlook and add to the risk of a more stagflationary economic environment.

Equity Strategy El Nino—More Than Just Hot Air

<ul><li>Fonterra's (FSF) 1H26 result was ahead of our expectations, with both divisions delivering solid outcomes.</li><li>FSF also reaffirmed its FY28 EBIT target of ~NZ$1.7bn, and with nothing in the half-year result materially boosted by one-off factors, we walk away incrementally confident in this, which continues to showcase the underlying business improvements.</li><li>FSF trades on a gross yield of ~10%–11% and 12-month forward PE of ~10x (long-run average of ~11x), which we view as reasonable value, given the material improvement in returns on capital versus history.</li></ul>

Fonterra's (FSF) 1H26 result was ahead of our expectations, with both divisions delivering solid outcomes.FSF also reaffirmed its FY28 EBIT target of ~NZ$1.7bn, and with nothing in the half-year result materially boosted by one-off factors, we walk away incrementally confident in this, which continues to showcase the underlying business improvements.FSF trades on a gross yield of ~10%–11% and 12-month forward PE of ~10x (long-run average of ~11x), which we view as reasonable value, given the material improvement in returns on capital versus history.

<ul><li>Fonterra (FSF) has reported yet another solid result.</li><li>FSF's full-year EPS guidance range has lifted slightly, with the implied mid-point now NZ57.5cps versus its prior forecast of NZ55cps.</li><li>Net debt reduced to NZ$4.9bn from NZ$5.5bn at 1H25.</li></ul>

Fonterra (FSF) has reported yet another solid result.FSF's full-year EPS guidance range has lifted slightly, with the implied mid-point now NZ57.5cps versus its prior forecast of NZ55cps.Net debt reduced to NZ$4.9bn from NZ$5.5bn at 1H25.

Fonterra (FSF): 1H26 Result – Initial Impressions

New Zealand

Fonterra Cooperative Group Ltd is a New Zealand multinational dairy co-operative and its farmer shareholders are the suppliers of milk to Fonterra in New Zealand. The Company operates Fonterra Shareholders' Fund, which provides additional financial flexibility for farmer shareholders who would have the opportunity to sell economic rights of shares to the fund.

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Fonterra Shareholders Fund (FSF NZ)

Fonterra FY26 Guidance Churns Higher

Fonterra (FSF) has lifted its FY26 EPS guidance by +13% at the midpoint to a revised range of between 60cps and 70cps. Our confidence in FSF's...

Forsyth Barr

Fonterra (FSF): Q3 Update And Guidance Upgrade

Fonterra (FSF) has provided a positive Q3 trading update this morning, with FY26 EPS guidance lifted +13% at the midpoint to between 60cps and...

Forsyth Barr

Equity Strategy El Nino—More Than Just Hot Air

There is a ~65% probability of an El Niño event developing by the end of July 2026 with a strong likelihood that it develops into a ‘strong’ event...

Forsyth Barr

Fonterra 1H26 Result—Double Delivery

Fonterra's (FSF) 1H26 result was ahead of our expectations, with both divisions delivering solid outcomes. FSF also reaffirmed its FY28 EBIT...

Forsyth Barr

Fonterra (FSF): 1H26 Result – Initial Impressions

Fonterra (FSF) has reported yet another solid result. FSF's full-year EPS guidance range has lifted slightly, with the implied mid-point now...

Forsyth Barr

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