Editorial: Well Done, Miles!
OPINION: In 2018, when Fonterra’s board tapped Miles Hurrell to step in as interim chief executive, the co-operative was in the doldrums.
For nine months ending April 30 this year, the co-op’s total group normalised Earnings Before Interest and Tax (EBIT) topped $815 million, an increase of $301 million on this time last year.
Fonterra chief executive Miles Hurrell attributes the result to work done over the last year to strengthen its balance sheet, and the co-op’s ability to respond quickly has helped manage the COVID-19 situation over the last few months. “We’re drawing on our global supply chain and diverse product and customer base to minimise disruptions for our customers and our business.
“COVID-19 has affected virtually every country, market and industry, and as a result, the global dairy market is volatile and the outlook is uncertain.
“This is a tough environment for everyone. As a New Zealand dairy co-op, exporting 95% of our products, many of the markets we do business in have always been prone to sudden shocks and this can impact where, when and what we sell. However, the global nature of COVID-19 is like nothing we’ve experienced before.
“Like other businesses, we will feel the impact of COVID-19 and its flow-on effects but how and to what extent is still uncertain. We are drawing on all our experience in managing market volatility.”
Hurrell says he’s proud to lead a team “who genuinely care and recognise the importance of our farmer owners, unit holders, customers and local communities”.
“The way our co-op has responded to COVID-19 has been a real highlight for me.”
All three of Fonterra’s business units have delivered a good performance for the year to date, despite the negative impact COVID-19 had on the foodservice business in the third quarter.
Key results
- Total Group Earnings Before Interest and Tax (EBIT): $1.1 billion, up from $378 million
- Total Group normalised EBIT: $815 million, up from $514 million
- Total Group normalised gross margin: $2.5 billion, up from $2.2 billion
- Normalised Total Group operating expenses: $1,665 million, down $148 million from $1,813 million
- Free cash flow: $698 million, up $1.4 billion
- Net debt: $5.7 billion, down from $7.4 billion
