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New leaders at the helm: Fonterra chairman John Monaghan (left) and chief executive Miles Hurrell.
Fonterra chief executive Miles Hurrell is asking shareholders for time to turn the business around.
Hurrell, confirmed last week as chief executive after six months in an interim role, believes his appointment is the start of a new era for the co-op.
He acknowledges that farmer shareholders and unitholders are looking for a change in direction: “Something we have to move on very quickly, in my mind,” Hurrell told Dairy News.
“We need to do things differently… but it’s a large organisation with businesses and footprints all over the world. Changing direction does take time.”
Hurrell says he is humbled by the support from farmer shareholders since his appointment.
“I thank farmers for messages of support and I look forward to working with them as we go about getting this business back to where it needs to be.”
Fonterra last year posted a historic first annual net loss of $196 million.
Last month it said it would pay a higher milk price to its suppliers but revised its forecast earnings down to 15-25c/ share.
Fonterra’s share price slumped to $4.20/share after the announcement; it had been hovering around $6.60/share at the beginning of last year. Following Hurrell’s confirmation as chief executive last week, the share price rose to $4.41/share.
Hurrell says the earnings guidance is disappointing and suggests “we need to do things fundamentally different from way we have”.
Fonterra’s management is working with the board on a new strategic direction. An update is expected when Fonterra announces its interim results next week.
“We will give a flavor of those changes on March 20 but it will take time to work through those things,” he says.
Fonterra aims to reduce debt by $800m by the end of the financial year; three major assets -- investment in Chinese company Beingmate, the Tip Top Ice Cream business in NZ and a third unnamed business -- form part of this.
The co-op has unwound its joint venture in Australia with Beingmate and has taken back control of its Darnum plant in Victoria.
Hurrell says it is talking to several parties about Tip Top.
He says the co-op will talk about the third business when it presents interim results on March 20.
But he says it was important for the co-op to get its strategy right before moving on assets.
Turning Fonterra around will take time — Hurrell
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
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