Fonterra boss set to ‘prioritise’ $800 million debt reduction

In a recent Twitter statement – the newly appointed CEO of Fonterra – Miles Hurrell confirmed that “reducing Fonterra’s debt by $800 million [NZD] is a main priority” in his new role.

Last year, Fonterra revealed its first ever annual net loss of $196 million since its establishment in 2001. This is after a net profit of $745 million the previous year.

Following this announcement, Miles Hurrell outlined his plan for turning the business around and said: “There are people depending on us – farmers, unit holders and employees who want to be part of a successful co-operative.

We are putting in place a clear plan for how we are going to lift Fonterra’s performance. It relies on us doing a number of things differently.

The co-operative gave false hope to its suppliers last week when it offered to pay a higher milk price, but revised its forecast earnings down to 15-25c/share.

Following this, its share price slumped to $4.20/share after it had been hovering around $6.60/share at the beginning of last year. However, after Hurrell’s confirmation as chief executive, the share price rose to $4.41/share.

Hurrell is very disappointed at these results and is working with Fonterra on a new strategic direction for the business; the results of which are expected to be announced next week – when the company reveals its interim results.

Tip Top ice cream

In other news, as part of Fonterra’s plan to reduce debt by $800 million by the end of the financial year; last year it announced it was considering selling its famous ice cream brand, Tip Top ice cream.

In a Twitter statement in December, it said: “It’s our only ice cream business and to take it to its next phase will require a level of investment beyond what we can make.”

In light of this, Fonterra recently made an “iconic” pitch on its Tip Top ice cream brand to potential buyers, saying: “It is a unique opportunity to invest in an iconic New Zealand company with 80 years of heritage.”

An update on this is also expected next week.