Divestment means Fonterra can focus on its strengths
OPINION: Fonterra's board has certainly presented us, as shareholders, with a major issue to consider.
Fonterra’s first half results show a turnaround in financial performance, with increased underlying earnings and reduced debt.
This will be welcomed by farmers, left angry and disappointed by two consecutive years of net losses caused by massive write downs of overseas assets.
Total group normalised earnings for the first six months of the 2020 financial year are up $272 million on last year to $584 million.
Fonterra chief executive Miles Hurrell says the co-op has delivered this through stable underlying earnings from Ingredients business, improving gross margins in Foodservice and reducing our operating expenses.
“Our Foodservice business has definitely been our stand-out performer in the first half as we’ve grown our sales to bakeries and coffee and tea houses across Greater China and Asia.”
The co-op has continued to reduce debt.
“We completed the sale of DFE Pharma and foodspring® in the first half of the year with cash proceeds of $624 million and this has helped reduce net debt by 22% or $1.6 billion, compared to this time last year,” says Hurrell.
He says the co-op has built on the work done in 2019 and has continued to reset its business, introducing a new strategy, reorganising and resizing its teams so there is greater focus on customers, and at the same time, significantly lifting its financial performance.
“We are now a very different co-op to this time last year – we’re prioritising New Zealand milk and staying focused on what we know we’re good at and what makes a difference to our farmer owners, unit holders, employees and communities.
“While there’s no doubt the world is experiencing an almost unprecedented situation and response to COVID-19, I’m pleased with the progress we’ve made so far against our four priorities for 2020.
“These are to hit our financial targets, reduce our environmental footprint, build a great team, and support regional New Zealand. By achieving these, we will take strides towards our long-term goals of Healthy People, Healthy Environment and Healthy Business.”
Fonterra’s key financial targets for 2020 are to meet its earnings guidance of 15-25 cents per share, achieve a gross margin in excess of $3 billion, reduce debt so it is no more than 3.75x its earnings and ensure capital expenditure is no more than $500 million.
Commenting on these targets, Hurrell says he is pleased with the progress and momentum Fonterra has achieved in the first six months of the financial year, but Fonterra is now operating in a very different global context as a result of COVID-19.
Meat co-operative, Alliance has met with a group of farmer shareholders, who oppose the sale of a controlling stake in the co-op to Irish company Dawn Meats.
Rollovers of quad bikes or ATVs towing calf milk trailers have typically prompted a Safety Alert from Safer Farms, the industry-led organisation dedicated to fostering a safer farming culture across New Zealand.
The Government has announced it has invested $8 million in lower methane dairy genetics research.
A group of Kiwi farmers are urging Alliance farmer-shareholders to vote against a deal that would see the red meat co-operative sell approximately $270 million in shares to Ireland's Dawn Meats.
In a few hundred words it's impossible to adequately describe the outstanding contribution that James Brendan Bolger made to New Zealand since he first entered politics in 1972.
Dawn Meats is set to increase its proposed investment in Alliance Group by up to $25 million following stronger than forecast year-end results by Alliance.
OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.
OPINION: Politicians and Wellington bureaucrats should take a leaf out of the book of Canterbury District Police Commander Superintendent Tony Hill.