Tuesday, 18 September 2018 11:55

‘We need to do better’ — Hurrell

Written by 
Miles Hurrell. Miles Hurrell.

Fonterra chief executive Miles Hurrell says a clear plan is in place to lift the co-op’s performance.

“It relies on us doing a number of things differently,” he says.

The co-op is taking stock of the business -- reviewing all investments, major assets and partnerships to ensure they still meet today’s needs. 

“This will involve a thorough analysis of whether they directly support the strategy, are hitting their target return on capital and whether it can scale them up and grow more value over the next two-three years,” he says.

“This will start with a strategic review of the cooperative’s investment in Chinese baby food company Beingmate.”

Fonterra is also looking at “getting the basics right” and has begun acting to fix the businesses that are not performing. 

Hurrell says financial discipline will be lifted throughout the co-op so debt can be reduced and return on capital improved.

Farmers will get more accurate forecasting.

The business will be run on more realistic forecasts with a clear line of sight on potential opportunities and the risks. 

“It will also be clear on its assumptions, so farmers and unitholders know exactly where they stand and can make the decisions that are right for them and their businesses.”

Chairman John Monaghan says the co-operative is being clear with farmers and unitholders on what it will take to achieve the forecast earnings.

“For the first time, we are sharing some business unit specific forecasts. Among others, these see the ingredients and consumer and foodservice businesses achieving an EBIT of between $850 million and $950m, and between $540m and $590m, respectively.

“FY19 is about lifting the performance of our cooperative.

“We are taking a close look at the cooperative’s current portfolio and direction to see where change is needed to do things faster, reduce costs and deliver higher returns on our capital investments.

“This includes an assessment of all the cooperative’s investments, major assets and partnerships against our strategy and target return on capital.

More like this

Fonterra R&D: Innovation needs more than just PhDs

Common sense and good human judgement are still a key requirement for the super highly qualified staff working at one of New Zealand's largest and most important research facilities - Fonterra's R&D Centre at Palmerston North.

Misguided campaign

OPINION: Last week, Greenpeace lit up Fonterra's Auckland headquarters with 'messages from the common people' - that the sector is polluting the environment.

Featured

Big return on a small investment

Managing director of Woolover Ltd, David Brown, has put a lot of effort into verifying what seems intuitive, that keeping newborn stock's core temperature stable pays dividends by helping them realise their full genetic potential.

Editorial: Sensible move

OPINION: The Government's decision to rule out changes to Fringe Benefit Tax (FBT) that would cost every farmer thousands of dollars annually, is sensible.

National

Machinery & Products

» Latest Print Issues Online

The Hound

Overbearing?

OPINION: Dust ups between rural media and PR types aren't unheard of but also aren't common, given part of the…

Foot-in-mouth

OPINION: The Hound hears from his canine pals in Southland that an individual's derogatory remarks on social media have left…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter