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.

Thematic (Sector/Industry)

<ul><li>Milk prices continue to trend lower: On February 24, 2023, Fonterra downgraded its estimated FGMP payout from between NZ$8.50 and NZ$9.50 to between NZ$8.20 and NZ$8.80, a -6% downgrade at the midpoint</li><li>Dairy production slightly softer than prior seasons: New Zealand dairy production for December 2022 was flat compared to December 2021</li><li>Farm costs continue to rise: Farmers in New Zealand are facing increasing costs of fertiliser, fuel, and labour, resulting in a squeeze on profit margins</li></ul>

Milk prices continue to trend lower: On February 24, 2023, Fonterra downgraded its estimated FGMP payout from between NZ$8.50 and NZ$9.50 to between NZ$8.20 and NZ$8.80, a -6% downgrade at the midpointDairy production slightly softer than prior seasons: New Zealand dairy production for December 2022 was flat compared to December 2021Farm costs continue to rise: Farmers in New Zealand are facing increasing costs of fertiliser, fuel, and labour, resulting in a squeeze on profit margins

Forsyth Barr Dairy Farm Digest: Edition 1: Pricing Down, Costs Up

Equity Bottom-Up

Fonterra Shareholders Fund / Equity Bottom-Up

<ul><li>Fonterra has this morning provided another upgrade to FY23 earnings, with EPS guidance lifted ~+14% at the mid-point to NZ60cps from NZ52.5cps.</li><li>The guidance range remains very wide (NZ50-70cps) but the mid-point is ahead of both our (NZ52cps) and consensus (NZ51cps) expectations.</li><li>The upgrade is consistent with trends experienced in recent months and is primarily driven by the ongoing favourable product pricing relativities between reference and non-reference commodity products</li></ul>

Fonterra has this morning provided another upgrade to FY23 earnings, with EPS guidance lifted ~+14% at the mid-point to NZ60cps from NZ52.5cps.The guidance range remains very wide (NZ50-70cps) but the mid-point is ahead of both our (NZ52cps) and consensus (NZ51cps) expectations.The upgrade is consistent with trends experienced in recent months and is primarily driven by the ongoing favourable product pricing relativities between reference and non-reference commodity products

Fonterra: Q1 Business Update – Another FY23 Earnings Upgrade

<ul><li>Fonterra reported a solid FY22 result slightly ahead of the top end of its NZ25-35cps guidance and above both our and consensus expectations</li><li>Australia and Chile strategic updates the key news from the FY22 result</li><li>FY23 guidance and long-term targets retained; we continue to take a more conservative stance long-term</li></ul>

Fonterra reported a solid FY22 result slightly ahead of the top end of its NZ25-35cps guidance and above both our and consensus expectationsAustralia and Chile strategic updates the key news from the FY22 resultFY23 guidance and long-term targets retained; we continue to take a more conservative stance long-term

<ul><li>Solid FY22 result: Slightly ahead of expectations with underlying EPS of NZ35.2cps (FB; NZ33.5cps and consensus NZ33.9cps) and underlying EBIT of NZ$991m (FB; NZ$928m and consensus NZ$919m)</li><li>Dividend the key area of strength: Fonterra declared a final dividend of NZ15pcs taking the full year dividend to NZ20cps</li><li>Strategic updates: Fonterra stated the sale of its Chilean Soprole business is “progressing” however has now stated it will maintain full ownership of its Australian business which was previously earmarked as a divestment opportunity</li></ul>

Solid FY22 result: Slightly ahead of expectations with underlying EPS of NZ35.2cps (FB; NZ33.5cps and consensus NZ33.9cps) and underlying EBIT of NZ$991m (FB; NZ$928m and consensus NZ$919m)Dividend the key area of strength: Fonterra declared a final dividend of NZ15pcs taking the full year dividend to NZ20cpsStrategic updates: Fonterra stated the sale of its Chilean Soprole business is “progressing” however has now stated it will maintain full ownership of its Australian business which was previously earmarked as a divestment opportunity

Fonterra: FY22 Result – Initial Impressions

<ul><li>Fonterra has this morning provided a material upgrade to FY23 earnings, with EPS guidance lifted ~+40% at the mid-point to NZ52.5cps from NZ37.5cps</li><li>Fonterra has provided a wide guidance range (NZ45-60cps) but the mid-point is significantly ahead of both our and consensus expectations</li><li>The upgrade is primarily driven by favourable product pricing relativities between reference and non-reference commodity products and therefore is more one-off than a sustainable feature for future periods</li></ul>

Fonterra has this morning provided a material upgrade to FY23 earnings, with EPS guidance lifted ~+40% at the mid-point to NZ52.5cps from NZ37.5cpsFonterra has provided a wide guidance range (NZ45-60cps) but the mid-point is significantly ahead of both our and consensus expectationsThe upgrade is primarily driven by favourable product pricing relativities between reference and non-reference commodity products and therefore is more one-off than a sustainable feature for future periods

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)

Forsyth Barr Dairy Farm Digest: Edition 1: Pricing Down, Costs Up

The Forsyth Barr Dairy Farm Digest provides a snapshot of information relevant to New Zealand's dairy sector; we include forecasts on the Farmgate...

Forsyth Barr

Fonterra: Q1 Business Update – Another FY23 Earnings Upgrade

Fonterra has this morning provided another upgrade to FY23 earnings, with EPS guidance lifted ~+14% at the mid-point to NZ60cps from NZ52.5cps; the...

Forsyth Barr

Fonterra: FY22 Result — Green Pastures

Fonterra reported a solid FY22 result slightly ahead of the top end of its NZ25-35cps guidance and above both our and consensus expectations; the...

Forsyth Barr

Fonterra: FY22 Result – Initial Impressions

Fonterra reported a solid FY22 result slightly ahead of our and consensus expectations with underlying EPS of NZ35.2cps against guidance to be...

Forsyth Barr

Fonterra: Material FY23 Earnings Upgrade

Fonterra has this morning provided a material upgrade to FY23 earnings, with EPS guidance lifted ~+40% at the mid-point to NZ52.5cps from NZ37.5cps

Forsyth Barr

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