Fraser Whineray: a results-oriented business leader with a track record on decarbonisation

Fonterra’s  board,  under   heavy  fire   for the losses racked up  in  the last two years,  may at last   be getting something  right.  Its recruitment of  Mercury’s  CEO Fraser Whineray to the newly created  post of  chief operating  officer   puts him in pole position to drive innovation,  efficiency, and  sustainability  in the co-op.

When he joins  Fonterra  next year  he will bring with him the credentials of having transformed Mercury,  simplifying the business  through the divestment of overseas interests and developing a  compelling strategy for  sustainable growth.

Harbour  Asset Management’s Shane Solly  said Whineray adds  “a  bit of grunt to the front row at Fonterra”.

In that  context, Point of Order  notes, Whineray  would be following the example of  his  renowned uncle,  the late Sir Wilson Whinerary,  who not only  captained the All  Blacks from the front row, but subsequently  had a  successful career as a businessman and  company director. Continue reading “Fraser Whineray: a results-oriented business leader with a track record on decarbonisation”

Farmers are getting more milk from each cow – they deserve a much better performance from Fonterra

This   is the second  chapter  in the  woes  of  Fonterra, and  behind  it   the  dairy industry,  on  which the  New Zealand  economy is  so  dependent.

Point of Order   listed  some of those  woes    last  week.  Now, in the  wake  of  the latest  revelation,  Fonterra  will  have to absorb a loss of between $590m and $675m for the current financial year.

Critics   of the industry have  sprung  to the attack:  Minister of Regional Economic Development Shane Jones is calling Fonterra’s management “corporate eunuchs” and labels Fonterra’s board as “grossly inept”.

Greenpeace    has  a  simple solution:  halve  the   dairy herd, a move that would cost the country $8.3bn in lost exports, and lower the standard of living  of every  New Zealander.

Jones’ ideas  to resolve  Fonterra’s financial  difficulties  are hardly  more  realistic.

Sacking the board  won’t   solve anything:  nor  trying to  recruit  a new  executive team  (though it might be worth  asking Chris Luxon  if he’d take a look). Continue reading “Farmers are getting more milk from each cow – they deserve a much better performance from Fonterra”

Comforting news for dairy farmers as companies report results and the world price rises again

Encouraging signs emerged this week that key elements in the structure of NZ’s largest export industry are whipping themselves back into the shape they should be.

The giant  co-op  Fonterra  has  gone back  into the  black  with a net profit of $80 million in the  first half,  after previously recording  a  net  loss of  $186m.

Meanwhile Westland Milk Products, NZ’s second biggest dairy co-op, is in line to be  sold  to China’s biggest  dairy company,  Yili,  in  a $588m  transaction that would inject nearly half a million  dollars into the operations of  each  of its  suppliers.

Alongside these co-ops, the Canterbury-based Synlait has underlined its strength in the  industry with a  solid result in  its half-year after  achieving   higher sales  volumes.  It reported a half-year net profit of $37.3m,  9.6%  lower  than   the  $41.3m  in the previous first   half,  but  with the  focus  on investing for  growth,  with a  second processing  plant due  to come on stream for  the  2019-20 season. Continue reading “Comforting news for dairy farmers as companies report results and the world price rises again”

Something festive for Fonterra farmers? A hint of solace would be a start…

Fonterra’s  suppliers will be choking on their  Xmas  rations, as they  digest the  price  blows  the co-op  has delivered.  First,  the dairy giant has  revised down  its  forecast milk payout  range  for the season to $6-$6.30 from the  earlier  $6.25-$6.50, and, second,  it is clawing back  some of the $4.15/kg  advance payment  rate.

Farmers  in  January will be paid  $4/kg for the  milk they supplied in  December plus the  co-op  is  clawing  back  15c/kg for all the  milk  supplied   between  June and November.

It  is  not   surprising that farmers   with  costs of  production  running   at  or above  $6/kg  are  reported to  be  “shocked”  and  “angry”.   Even those  efficient  operators   who have  lower  operating costs  won’t be happy  with   Fonterra  saying it  “appreciates”  the budgeting impact  the updated $4 advance rate will have on farmers in  January.     Continue reading “Something festive for Fonterra farmers? A hint of solace would be a start…”

Fonterra must learn to be driven by  profitability, not  volume 

Fonterra  chairman  John Monaghan  sought to   cheer  up  the  co-op’s farmer-shareholders  by telling them  at what was reported to be a “packed” annual  meeting  that  “For a time this year, NZ farmers were paid this highest milk prices in the world.”

He  insisted there has been a structural change in  the co-op’s milk prices since Fonterra was formed.

We’ve gone from being paid about half as much as our global peers to the point now where we are consistently paid the same or thereabouts.It sounds arrogant to say it, but the fact is that simply never would have happened without a strong Fonterra”. Continue reading “Fonterra must learn to be driven by  profitability, not  volume “

The grass on the far side of the fence will look much greener for Fonterra farmers

It  must have felt  like  salt being rubbed into  their  financial wounds   for Fonterra’s farmer-shareholders, when Synlait  Milk this week  reported  its  net profit  soared  89%  to  $74.6m.   Fonterra’s  mob   saw  their  co-op  notch  up  a  loss of  $196m, and  with prices  at GDT auctions trending down,  they may also have to accept a trim  to the forecast milk price.

Where  Fonterra  talks of   slimming its  portfolio,  Synlait  is still investing  in expansion.

In the latest year Synlait has been working on new and expanded plants in Dunsandel, Auckland and Pokeno as well as a research and development centre in Palmerston North. Continue reading “The grass on the far side of the fence will look much greener for Fonterra farmers”

Plenty of advice for Fonterra’s bosses – but are our expectations too high?

Dairy farmers  should be pleased with the  advice  liberally and freely tendered to Fonterra in the wake of the co-op’s board deciding to halt its international  search for a  new  CEO and instead,  with an  interim CEO,  Miles Hurrell, “pause and  assess  the  way   ahead”.

Fran  O’Sullivan,  Head of Business at NZME,  which publishes the  NZ  Herald, says appointing an interim chief executive to run New Zealand’s largest company is an admission of failure that should force Fonterra’s board to look hard at its own performance.  And she  concludes:

If this company is to succeed, it needs to be governed and led by grown-ups within a grown-up NZ commercial environment”.

Continue reading “Plenty of advice for Fonterra’s bosses – but are our expectations too high?”