Much-anticipated earnings forecasts from Fonterra's new business strategy are likely to be revealed in September around annual results time, says chairman Peter McBride.
A lot of farmer-shareholder votes could be riding on these and other strategy numbers as New Zealand's biggest business proposes a capital restructure that will need 75per cent farmer support later this year.
Fonterra leaders have promised the forecast information following nearly three months of nationwide consultations with shareholders, who made it clear their support hinged on the co-operative's future performance after $4 billion of wealth destruction under the old strategy.
McBride told the Herald the more detailed information about the strategy would include numbers, and while he couldn't give an exact time, it could be in September when annual results are also published.
The big exporter's changed business strategy, evolved under new senior management and a largely new board of directors, has Fonterra now focusing on the quality of New Zealand milk and its use in specialist ingredients for the world's food service and health and nutrition sectors, leveraging the New Zealand dairy industry's research and development strengths.
The old strategy, which culminated in disastrous net losses in 2018 and 2019, had a focus on investments in overseas milk production and consumer goods companies - particularly in China.
"We will roll out our intentions," said McBride.
"We have spent nine months looking out 30 years at patterns of consumption and how they will impact on us.
"We've been questioning are we a cow's milk dairy company or a health and nutrition company? (We'll give) our intentions around R&D in terms of growing value, what the next decade will look like in terms of capex - we have to deal with carbon in the supply chain and that will require capex.
"What the earnings profile looks like as a result of the decisions we make - we'll be giving our farmers much more granular detail of where we are going."
Efficient use of capital and return on capital were cornerstones of the strategy, he said.
Fonterra capital restructure needs 75 per cent vote of shareholder support. Photo / File
One Fonterra watcher pleased to see Fonterra's commitment to providing further information on its strategy is Jarden managing director, head of research Arie Dekker.
"It is positive to see Fonterra's commitment to providing further information on its strategy .... including with regards target areas for investment, the returns it is targeting and the measures against which it will track progress.
"This could be very interesting if it is fulsome enough to enable farmers to consider how the strategy and scope of Fonterra's future activities might impact on different capital structure options."
Dekker said Monday's market update on the proposed capital restructure showed Fonterra maintained a reasonably strong preference for directors' preferred option, with some settings' adjustments based on farmer-shareholder feedback.
"But Fonterra is also open to the fact that it has received feedback including on a range of alternative proposals that have been submitted by farmers. It remains unclear whether there is sufficient support to carry the proposal at this point with Fonterra outlining plans to continue with further consultation ahead of a targeted vote in December."
