Monday, 30 April 2018 09:00

Unacceptable attitude at Fonterra

Written by  Sudesh Kissun
Leonie Guiney. Leonie Guiney.

Former Fonterra director Leonie Guiney is not ruling out another tilt at a co-op directorship.

Guiney, gagged by Fonterra with a court injunction, hopes the court case will be finalised before nominations for board elections open in July.

Fonterra obtained an ex-parte injunction against Guiney and media outlets on March 2 to prevent confidential board information being made public.

Guiney told Rural News she has filed her defence and is suing the co-op for defamation. The case is set for hearing on September 15.

A fierce defender of Fonterra’s co-op ethos, the South Canterbury farmer served for three years on the board as a farmer-elected director. She was prevented from re-contesting last year.

Guiney says she hasn’t decided on contesting this year’s board elections; if a settlement is reached earlier she could then make a call.

She says Fonterra’s injunction is baseless and she never divulged any confidential board information to the media.

However, Guiney is questioning the board’s attitude to losses on investments in China, especially in the controversial Beingmate joint venture; the co-op paid $750 million three years ago for its 18.8% stake, but after the latest write-down of $404m the Beingmate investment is now worth only $244m.

Fonterra’s board is now focusing on the ‘enterprise value’ of its China operations, notes Guiney.

“This tells us nothing about shareholder value and is misleading; they are not only misleading shareholders but misleading themselves.” 

 Guiney says Fonterra shareholders have been contacting her to support her stance on the prudent use of shareholder capital. She is urging the Fonterra board to be more transparent with shareholders.

“A strong Fonterra in future will depend on much better performance with capital. This would require an open and non-defensive acceptance of issues that the [financial] results suggest exist [because of the] investment culture, in order to improve it.”

Guiney says the days of easy access to shareholder capital may be over for Fonterra.

 “The easy access to capital Fonterra has enjoyed with milk growth for almost the 15-year board tenure of the current chairman is over, because the growth of milk into Fonterra is over. 

“The attitude that a $400m write-down of one investment is small in the scheme of things is not sustainable in a cooperative attracting no new capital,” she said. 

“In my opinion it’s not acceptable regardless of whether you have easy access to capital or not, but it’s even less acceptable in an environment where Fonterra is losing market share as fast as competitors can build new stainless steel.”

More like this

Fonterra posts solid results

Fonterra has delivered a solid half-year result, thanks to higher margins and sales volumes across the co-op's diversified product and category mix.

Featured

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

Editorial: Passage to India

OPINION: Even before the National-led coalition came into power, India was very much at the fore of its trade agenda.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.

» Latest Print Issues Online

Milking It

Papal visit

OPINION: European farmers are going to extreme lengths to have their message heard.

Thai egg tarts

OPINION: The hustle and bustle of one of Bangkok's most popular fast food outlets may feel a world away from…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter