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>FY23 is set to be a record year for Fonterra: 1H23 was a stellar period for Fonterra</li><li>Capital management initiatives confirmed — NZ$800m tax-free capital return in late CY23</li><li>Capital structure implementation process is nearly over</li></ul>

FY23 is set to be a record year for Fonterra: 1H23 was a stellar period for FonterraCapital management initiatives confirmed — NZ$800m tax-free capital return in late CY23Capital structure implementation process is nearly over

<ul><li>Fonterra reported a strong underlying 1H23 result.</li><li>The result was slightly below our expectations, with EPS of NZ33cps versus FB of NZ36cps, however when normalising for impairments included in Fonterra’s normalised numbers we view this as a strong operational result</li><li>Fonterra has announced a NZ$800m capital return following its recent Chile and Brazil sales (asset divestment process is now complete pending the receipt of proceeds) which is expected to take place in October 2023</li></ul>

Fonterra reported a strong underlying 1H23 result.The result was slightly below our expectations, with EPS of NZ33cps versus FB of NZ36cps, however when normalising for impairments included in Fonterra’s normalised numbers we view this as a strong operational resultFonterra has announced a NZ$800m capital return following its recent Chile and Brazil sales (asset divestment process is now complete pending the receipt of proceeds) which is expected to take place in October 2023

Fonterra: 1H23 Result – Initial Impressions

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

<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

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: 1H23 Result — Milking It

Fonterra's 1H23 result was a record interim earnings performance with EPS of NZ37cps; The key area of strength was its Ingredients division, driven...

Forsyth Barr

Fonterra: 1H23 Result – Initial Impressions

Fonterra reported a strong underlying 1H23 result - the result was slightly below our expectations, with EPS of NZ33cps versus FB of NZ36cps,...

Forsyth Barr

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

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