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) reported a solid FY25 result.</li><li>EPS of NZ71cps was ahead of the midpoint of its guidance, well ahead of our NZ51cps estimate post its FY24 result, and its balance sheet has returned to a robust position following weak cashflow in 1H25.</li><li>We think the balance sheet strength opens up the path for further capital management opportunities, but management was reluctant to be drawn on this.</li></ul>

Fonterra (FSF) reported a solid FY25 result.EPS of NZ71cps was ahead of the midpoint of its guidance, well ahead of our NZ51cps estimate post its FY24 result, and its balance sheet has returned to a robust position following weak cashflow in 1H25.We think the balance sheet strength opens up the path for further capital management opportunities, but management was reluctant to be drawn on this.

Fonterra FY25 Result—Cream Rising to the Top

<ul><li>Initiated coverage on Fonterra with a NEUTRAL rating and a target price of NZ$6.00, reflecting a balanced investment view.</li><li>Concerns over the Mainland Group's valuation and performance, particularly in Australia, which has shown poor returns on capital and cash flow generation.</li><li>Increased confidence in Fonterra's core Ingredients and Foodservice earnings and returns profile, potentially supporting dividends of NZ30cps post-Mainland divestment.</li></ul>

Initiated coverage on Fonterra with a NEUTRAL rating and a target price of NZ$6.00, reflecting a balanced investment view.Concerns over the Mainland Group's valuation and performance, particularly in Australia, which has shown poor returns on capital and cash flow generation.Increased confidence in Fonterra's core Ingredients and Foodservice earnings and returns profile, potentially supporting dividends of NZ30cps post-Mainland divestment.

Fonterra - Mainland and Beyond—Initiate at NEUTRAL

<ul><li>Fonterra reported a strong 1H25 result, with earnings exceeding expectations and a higher interim dividend of NZ22cps compared to the forecast of NZ20cps.</li><li>The company's Ingredients gross profit saw stronger margins, while Consumer margins remained resilient despite high milk prices.</li><li>Free cash flow was notably weak at approximately -NZ$2.1bn, due in part to stronger farmer advanced payment rates.</li></ul>

Fonterra reported a strong 1H25 result, with earnings exceeding expectations and a higher interim dividend of NZ22cps compared to the forecast of NZ20cps.The company's Ingredients gross profit saw stronger margins, while Consumer margins remained resilient despite high milk prices.Free cash flow was notably weak at approximately -NZ$2.1bn, due in part to stronger farmer advanced payment rates.

Fonterra: 1H25 Result – Initial Impressions

<ul><li>Fonterra has upgraded its FY25 EPS guidance from the upper half of NZ40-60cps to NZ55-75cps, reflecting a 16% increase, driven by Ingredients strength and Consumer channel resilience.</li><li>The company's Consumer sale update includes a presentation ahead of IPO roadshow meetings, targeting a significant capital return if a sale is successful.</li><li>Fonterra's revised dividend payout ratio implies a strong dividend yield of approximately 9% on the current FSF price.</li></ul>

Fonterra has upgraded its FY25 EPS guidance from the upper half of NZ40-60cps to NZ55-75cps, reflecting a 16% increase, driven by Ingredients strength and Consumer channel resilience.The company's Consumer sale update includes a presentation ahead of IPO roadshow meetings, targeting a significant capital return if a sale is successful.Fonterra's revised dividend payout ratio implies a strong dividend yield of approximately 9% on the current FSF price.

Fonterra: More Positive News + Consumer Sale Update

<ul><li>Fonterra's 1H25 result was strong with normalised earnings ahead of the robust prior comparable period. </li><li>Key highlights include (1) Ingredients with stronger margins despite narrower price relativities versus the prior period (stream returns contributed ~NZ4cps of its total ~NZ44cps EPS), and (2) resilient Consumer margins despite elevated milk prices. </li><li>Reflecting confidence in the outlook and its balance sheet strength, Fonterra declared an interim dividend of NZ22cps (fully imputed) — a record high for an interim period. </li></ul>

Fonterra's 1H25 result was strong with normalised earnings ahead of the robust prior comparable period. Key highlights include (1) Ingredients with stronger margins despite narrower price relativities versus the prior period (stream returns contributed ~NZ4cps of its total ~NZ44cps EPS), and (2) resilient Consumer margins despite elevated milk prices. Reflecting confidence in the outlook and its balance sheet strength, Fonterra declared an interim dividend of NZ22cps (fully imputed) — a record high for an interim period. 

Fonterra - 1H25 Result — More of the Same

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 FY25 Result—Cream Rising to the Top

We think the balance sheet strength opens up the path for further capital management opportunities, but management was reluctant to be drawn on this.

Forsyth Barr

Fonterra - Mainland and Beyond—Initiate at NEUTRAL

Initiated coverage on Fonterra with a NEUTRAL rating and a target price of NZ$6.00, reflecting a balanced investment view.

Forsyth Barr

Fonterra: 1H25 Result – Initial Impressions

Fonterra reported a strong 1H25 result, with earnings exceeding expectations and a higher interim dividend of NZ22cps compared to the forecast of...

Forsyth Barr

Fonterra: More Positive News + Consumer Sale Update

Fonterra has upgraded its FY25 EPS guidance from the upper half of NZ40-60cps to NZ55-75cps, reflecting a 16% increase, driven by Ingredients...

Forsyth Barr

Fonterra - 1H25 Result — More of the Same

Key highlights include (1) Ingredients with stronger margins despite narrower price relativities versus the prior period (stream returns...

Forsyth Barr

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