Fonterra Co-operative Group's Revised Strategy Announcement

Fonterra Co-operative Group Ltd (ASX:FSF) has released its revised strategy, emphasizing a deeper focus on its high-performing Ingredients and Foodservice businesses to enhance value for farmer shareholders and unit holders. The strategic review confirmed the Co-op's strengths as a B2B dairy nutrition provider, leading to the exploration of divestment options for its global Consumer businesses.

Executive Commentary on Revised Strategy

The revised strategy aims to create a pathway to greater value creation, allowing the Co-op to announce enhanced financial targets and policy settings. This includes an increased target average return on capital to 10-12%, up from 9-10%, and a new dividend policy of 60-80% of earnings, up from 40-60%. The focus remains on providing stability and managing risk for farmers while maximizing returns from their milk and capital invested in Fonterra.

Summary of Revised Strategy and Outlook

Fonterra's revised strategy emphasizes a deeper focus on high-performing Ingredients and Foodservice businesses, with plans to explore divestment options for its global Consumer businesses. The Co-op aims to increase its target average return on capital and implement a new dividend policy to enhance financial targets and policy settings. Looking ahead, Fonterra has made strategic choices to deliver the strongest farmer offering, unleash the Ingredients engine, keep up momentum in Foodservice, invest in operations for the future, build on its sustainability position, and innovate to drive an advantage. The Co-op also intends to seek shareholder approval prior to divesting its Consumer businesses, and will provide a rolling three-year forward-looking view of financial assumptions to track progress annually. Fonterra's vision is to be the source of the world's most valued dairy, and the revised strategy aligns with its ambitions to create end-to-end value for farmers and ensure dairy market stability.