Dairy giant Fonterra is to cut 523 jobs across its central procurement, finance, information services, human resources, strategy and legal sectors.

The New Zealand co-op announced the jobs cut in its latest update on the co-ops business review.

The co-op says that it expects on-going payroll savings between NZ$55 and NZ$60 per annum.

Theo Spierings, Chief Executive of Fonterra, said that the key aims of the review are to ensure that the co-op 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,” Spierings said.

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, it says.

Fonterra said that the 523 roles will be disestablished at a one-off cost of NZ$12 – NZ$15 million.

Spierings said the news had been unsettling for the people affected but the co-op had to change if it was to remain strongly competitive in todays global dairy market.

“Reducing the number of roles in our business isn’t about individual competency; it is about continually improving the way we deliver performance,” he said.

Fonterra said that the affected staff would begin to leave the co-op in September.

Fonterra said it has also informed staff that on August 5 it will begin consultation on new business structures with its people in administration roles, sales – ingredients, consumer, marketing, research and development, communications, health and safety, food safety and quality, group resilience and risk, property, procurement and change management.