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 1H24 result with EPS ahead of our estimate; however, it left FY24 guidance unchanged.</li><li>While 1H24 was another period that included benefits from the ‘one-off’ stream returns, FSF expects these to largely reverse in 2H24.</li><li>FSF now expects a negligible stream returns benefit in FY24, which is below expectations when guidance was initially set, implying the base business continues to perform ahead of expectations (a consistent theme for FSF of late). </li></ul>

Fonterra (FSF) reported a solid 1H24 result with EPS ahead of our estimate; however, it left FY24 guidance unchanged.While 1H24 was another period that included benefits from the ‘one-off’ stream returns, FSF expects these to largely reverse in 2H24.FSF now expects a negligible stream returns benefit in FY24, which is below expectations when guidance was initially set, implying the base business continues to perform ahead of expectations (a consistent theme for FSF of late). 

<ul><li>Fonterra (FSF) reported a strong FY23 result, slightly ahead of expectations and a record for the co-op.</li><li>The strength in the result was, as expected, in its Ingredients division —​​​​​​​ driven by favourable stream returns as has been the case for the last two years. </li><li>While stream returns are volatile and unlikely to be sustained in future periods, we think it is important to step back and acknowledge this is record earnings for the co-op, and its total dividend of NZ50cps (final dividend of NZ40cps) is also a record. </li></ul>

Fonterra (FSF) reported a strong FY23 result, slightly ahead of expectations and a record for the co-op.The strength in the result was, as expected, in its Ingredients division —​​​​​​​ driven by favourable stream returns as has been the case for the last two years. While stream returns are volatile and unlikely to be sustained in future periods, we think it is important to step back and acknowledge this is record earnings for the co-op, and its total dividend of NZ50cps (final dividend of NZ40cps) is also a record. 

Fonterra - FY23 Result — Milking Record Profits

Thematic (Sector/Industry)

<ul><li>The Forsyth Barr Dairy Digest provides a snapshot of information relevant to New Zealand's dairy sector.</li><li>We include forecasts on the Farmgate Milk Price (FGMP), dairy production, on-farm costs and farm prices with supplementary information on lending, confidence, emissions, the infant formula market and our global analysis of the dairy industry. </li><li>This edition highlights that times are tough for farmers with volatile prices, subdued Chinese demand, and elevated operating and interest costs are pressuring on-farm profitability.</li></ul>

The Forsyth Barr Dairy Digest provides a snapshot of information relevant to New Zealand's dairy sector.We include forecasts on the Farmgate Milk Price (FGMP), dairy production, on-farm costs and farm prices with supplementary information on lending, confidence, emissions, the infant formula market and our global analysis of the dairy industry. This edition highlights that times are tough for farmers with volatile prices, subdued Chinese demand, and elevated operating and interest costs are pressuring on-farm profitability.

Forsyth Barr Dairy Digest - Edition 2 Cashflow Constraints

<ul><li>Fonterra has upgraded its FY23 earnings guidance for the fifth time.</li><li>Details are light but it expects EPS to be "at the top end" of its prior NZ65cps to NZ80cps range, well ahead of consensus expectations for what will be record earnings (prior high of NZ60cps in FY11).</li><li>The driver of the upgrade is favourable Ingredients margins (ongoing favourable product pricing relativities between reference and non-reference commodity products).</li></ul>

Fonterra has upgraded its FY23 earnings guidance for the fifth time.Details are light but it expects EPS to be "at the top end" of its prior NZ65cps to NZ80cps range, well ahead of consensus expectations for what will be record earnings (prior high of NZ60cps in FY11).The driver of the upgrade is favourable Ingredients margins (ongoing favourable product pricing relativities between reference and non-reference commodity products).

<ul><li>Fonterra has this morning provided another upgrade to FY23 earnings, with EPS guidance lifted ~+12% at the mid-point to NZ72.5cps from NZ65cps</li><li>The guidance range remains wide (NZ65-80cps) but the mid-point is ahead of both our (NZ67cps) and consensus (NZ67cps) expectations</li><li>The upgrade is consistent with trends experienced over the past 12 months and is primarily driven by the ongoing 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 another upgrade to FY23 earnings, with EPS guidance lifted ~+12% at the mid-point to NZ72.5cps from NZ65cpsThe guidance range remains wide (NZ65-80cps) but the mid-point is ahead of both our (NZ67cps) and consensus (NZ67cps) expectationsThe upgrade is consistent with trends experienced over the past 12 months and is primarily driven by the ongoing favourable product pricing relativities between reference and non-reference commodity products, and therefore is more one-off than a sustainable feature for future periods

Fonterra: Q3 Business Update – Another FY23 Earnings Upgrade

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 - 1H24 Result — Good Grazing

While 1H24 was another period that included benefits from the ‘one-off’ stream returns, FSF expects these to largely reverse in 2H24.

Forsyth Barr

Fonterra - FY23 Result — Milking Record Profits

The strength in the result was, as expected, in its Ingredients division — driven by favourable stream returns as has been the case for the...

Forsyth Barr

Forsyth Barr Dairy Digest - Edition 2 Cashflow Constraints

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

Forsyth Barr

Fonterra - Upgrade-Ja Vu

The driver of the upgrade is favourable Ingredients margins (ongoing favourable product pricing relativities between reference and non-reference...

Forsyth Barr

Fonterra: Q3 Business Update – Another FY23 Earnings Upgrade

Fonterra has this morning provided another upgrade to FY23 earnings, with EPS guidance lifted ~+12% at the mid-point to NZ72.5cps from NZ65cps; The...

Forsyth Barr

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52-week Range

Market Cap (USDm)

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Fonterra - 1H24 Result — Good Grazing

While 1H24 was another period that included benefits from the ‘one-off’ stream returns, FSF expects these to largely reverse in 2H24.

Forsyth Barr

Fonterra - FY23 Result — Milking Record Profits

The strength in the result was, as expected, in its Ingredients division —​​​​​​​ driven by favourable stream returns as has been the case for the...

Forsyth Barr

Forsyth Barr Dairy Digest - Edition 2 Cashflow Constraints

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

Forsyth Barr

Fonterra - Upgrade-Ja Vu

The driver of the upgrade is favourable Ingredients margins (ongoing favourable product pricing relativities between reference and non-reference...

Forsyth Barr

Fonterra: Q3 Business Update – Another FY23 Earnings Upgrade

Fonterra has this morning provided another upgrade to FY23 earnings, with EPS guidance lifted ~+12% at the mid-point to NZ72.5cps from NZ65cps; The...

Forsyth Barr

The strength in the result was, as expected, in its Ingredients division — driven by favourable stream returns as has been the case for the...