Fonterra lays off a further 227 staff; total job losses from ongoing review hit 750
By Fiona Rotherham
Sept. 21 (BusinessDesk) - Fonterra Cooperative Group, the world’s largest dairy exporter, has announced a further 227 job losses today as part of an on-going business review that has already seen 523 laid off in July.
Fonterra chief executive Theo Spierings said the cooperative had to make tough decisions to ensure Fonterra remains competitive in an environment of low global dairy prices.
“We will continue to fine-tune our organisation to ensure we best support the initiatives identified by our business review,” he said.
The job losses come from across a number of areas of the business in New Zealand and offshore including 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.
The jobs cuts would result in a one-off cost of $33 million and generate direct annual savings of $103 million a year, a spokesman said.
The previous redundancies in July incurred a one-off cost of between $12 million and $15 million while saving up to $60 million annually.
Spierings said the savings achieved so far from the business review have already enabled the cooperative to support its farmers “during challenging market conditions” with it using the strength of its balance sheet to offer farmer shareholders an interest-free loan of 50 cents per shared-up kilograms of milk solids for two years.
A Fonterra spokesman said this was expected to be the last of the bulk redundancies although the review was on-going and a few more jobs may go as the “fine-tuning” continues.
The review, undertaken by an internal management team and business management consultancy McKinsey & Co, was started in December. Before it began the cooperative had 18,500 staff globally and 11,500 in New Zealand.
The only new initiative Fonterra has identified as resulting from the review has been in its supply chain, to increase the utilisation of export containers leaving its distribution centres which is expected to save up to $5 million a year.
Fonterra’s revised farmgate milk price for the 2015/2016 season is $3.85kg/MS and earnings per share are forecast in the 40 to 50 cents range. The cooperative’s annual results are due out on Thursday.