Despite high fat prices it is now more profitable for Fonterra to make whole milk powder than butter and skim milk powder, co-op chairman John Wilson says.
Fonterra views this as the biggest step required at present, he says.
According to Spierings there is a mandate to execute a transformation plan and Beingmate returned a very small profit -- which includes a government grant.
“There was pressure on turnover because the market is coming out of new regulations; there is turnover pressure but a small profit,” he says.
All recommended directors were appointed at the annual meeting, “so a very calm and stable reappointment process of directors”.
Fonterra’s formula product Anmum had strong development in pilots in two cities in the first three years of the partnership. Anmum is an important pillar of the Beingmate business right now, Spierings says.
They are clearly on a pathway to a $100 million target in consumer products in year three. But cashflow and liquidity had an impact over the last couple of the months.
Spierings says it is “important that there is cash to the people buying and growing the Anmum business”.
Fonterra has written down $405 million in its Beingmate business.
“Clearly this outcome is unacceptable to our shareholders,” the co-op says in the report.
“The recovery of the value of this investment is the number-one immediate priority for the chief executive and management team.
“As an 18.8% shareholder, we do not have direct control over the company. But we are working to influence its direction and continue to call for an urgent business transformation through our relationship with Beingmate’s founder and majority shareholder.
“The board (Fonterra’s) has a working group – that includes independent directors Simon Israel and Clinton Dines – who both have significant China experience and expertise – to provide guidance and oversight to management as they work to recover the investment.”