Fonterra releases business update

Fonterra Co-operative Group Limited has provided a further update on its business review.

Chief executive Theo Spierings says,“The key aims of the review are to ensure that the Co-operative is best placed to successfully deliver its strategy, increase focus on generating cash flow, and implement specific, sustainable measures for enhancing efficiency.

“A simple example already identified by our supply chain team is a logistics solution that increases the utilisation of export containers leaving our distribution centres, saving up to $5 million a year.”

The review includes measures to improve profitability at Fonterra’s Australian business as well as a series of additional measures to remove barriers across the organisation to enable it to unlock more value.

Fonterra confirmed that it had completed consultation with its central procurement, finance, information services, human resources, strategy and legal teams. As a result, 523 roles will be disestablished at a one-off cost of $12 – $15 million. At that level the Co-operative expected on-going payroll savings of approximately $55 – $60 million per annum.

Mr Spierings said the news had been unsettling for the people affected but the Co-operative had to change if it was to remain strongly competitive in today’s global dairy market.