Fonterra looks close to home for revival

Fonterra is looking close to home for a pathway back into the black.

“We’re going back to being a New Zealand-based dairy co-op,” chairman John Monaghan said after NZ’s biggest company unveiled a $NZ557 million ($A514 million) full-year loss.

“You won’t hear us using words like ‘world leading’ or ‘world best’. If others wish to say that about us, that is great.”

Fonterra was dragged to its heaviest ever full-year loss by $NZ826 million of writedowns, almost $NZ550 million of which was related to its operations in China, Brazil and Venezuela.

Its response includes splitting its business along geographical lines into three parts, which will help it refocus on a domestic business that was impaired by $NZ210 million because of increased competition and operational challenges.

“Performance this year is not what it should have been,” Mr Monaghan said on Thursday.

“It is not the result when we said we would deliver to our owners,”

Chief executive Miles Hurrell agreed, saying he was “not proud of” the headline results.

Fonterra will close a cheese plant in Paraparaumu, north of Wellington, with the loss of about 70 jobs and more redundancies likely in other parts of the business.

But Mr Hurrell said 35 jobs would be created as they consolidated specialist cheese production in Taranaki.

“We need to become a leaner organisation,” Mr Hurrell said.

“We haven’t landed on what that looks like … where we’ll see rationalisations is potentially in senior roles.”

Fonterra already trimmed the equivalent of 1,500 full-time positions in the 12 months to July 31, 500 of them in NZ.

Mr Hurrell, who noted no employees received a bonus in FY19, also pledged a cultural change focused on a triple bottom line of “a healthy people, a healthy environment and healthy business”.

That means working with the government on climate change, supporting the goal of lowering emissions to 30 per cent below 2005 levels by 2030.

Methane, a cattle byproduct, is a leading contributor to New Zealand’s emissions.

“New Zealand is already the lowest carbon-producing milk producer in the world,” Mr Hurrell said.

“We can’t use that to rest on our laurels.”

AAP

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