Fonterra boss to step down

Elias Hubbard
March 21, 2018

Speaking to the announcement that CEO Theo Spierings would step down from his role later in the year Mr Coull said it was positive for the Co-op that the Board and Theo had been undertaking these discussions with the long-term very much front of mind.

Fonterra blames the downturn on a NZ$405 million writedown in the value of its stake in Chinese baby food firm Beingmate and costs arising from a 2013 contamination scare.

Wilson says the Board will decide how the Beingmate impairment and the Danone payment will be treated for final dividend purposes after the end of the financial year when it will have the full picture of Fonterra's operating performance.

"To be blunt, the investment in Beingmate has not gone the way we expected and there are things we would do differently, knowing what we know now".

Fonterra' first half descended into a bottom line loss of $348 million after accounting for a $183m legal settlement and the writing down of its investment in China's Beingmate by $405m. "From where I'm sitting and what I've seen reported it does appear things could get worse before they get better".

In relation to Beingmate Mr Coull noted that while the Council viewed the latest impairment as reflective of the reality of the situation he understood Farmers' frustrations with what the Council has described as an unacceptable situation.

Normalised earnings before interest and tax (before impairments) was $458 million, down 25% on the 2017 half year.

Fonterra posted total revenue of $9.8 billion for the six months ended January 1, up 6% on the same period a year ago.

Some reports are suggesting troubles in China are behind the resignation, although Chairman John Wilson denied this claim.

ANZ rural economist Con Williams said the lift in the 2017/18 milk price forecast to $6.55/kg, with the season's production 86 per cent sold was the major bright spot. The normalised net profit was $248 million, down 36%.

"We knew going into this year we would have to carefully manage low starting inventory levels".

"This was followed by reduced New Zealand milk collections due to hard weather conditions, further impacting our volumes available for sale".

Other reports by Click Lancashire

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