Fonterra appoints interim CEO after tightening its earnings forecast

Fonterra responsible for 30% of the world's dairy exports with revenue exceeding NZ$20 billion, is New Zealand's largest company.
Fonterra responsible for 30% of the world’s dairy exports with revenue exceeding NZ$20 billion, is New Zealand’s largest company.

New Zealand’s Fonterra has appointed Miles Hurrell as the cooperative’s interim chief executive to replace Theo Spierings, who said he would step down earlier this year.

The announcement comes after last week’s earnings forecast cut, citing tighter margins.

Hurrell is currently the chief operating officer of Farm Source – the unit responsible for working directly with Fonterra’s farmer-owners.

It comes after Fonterra’s chairman John Wilson resigned on health grounds and its chief executive Theo Spierings left his role.

Just days ago the world’s largest dairy exporter, cut its earnings guidance on Friday and lowered its forecast milk payout, looking to bolster its balance sheet amid tighter than expected margins.

Shares in Fonterra’s traded fund fell 3.1pc NZ$4.95, a near three-year low, after the firm’s second profit downgrade in three months.

The co-operative said in a statement that it had revised its forecast 2017/18 farmgate milk price – the price it pays farmers – down by 5c to NZ$6.70 per kg of milk solids.

It would also hold its full-year dividend at the 10c a share already paid in April, down from 40c in the previous year.

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“Our forecast performance is not where we expected it would be,” said Chairman John Monaghan.

“While the numbers are not finalised, our margins were less than we forecasted right across our global Ingredients and Consumer and Foodservice businesses.”

Fonterra said that higher milk prices had put pressure on earnings from its value-added branded products like yoghurt and cheese, and said its full-year normalized earnings will be at or slightly below its previously announced guidance range of 25 to 30 cents per share.

The firm said it wanted to maintain a strong balance sheet, rather than pay out more now to farmers, so that it was well-positioned for any future tough seasons.


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