Fonterra Cooperative Group, which is looking to cut hundreds of jobs as part of a review aimed at stripping costs out of its business, says it has begun talks with workers in administrative roles such as finance, legal and information services.
The world’s largest dairy exporter has hired business management consultant McKinsey & Co to assist in a review of its global operations, part of a strategy chief executive Theo Spierings says is needed to ensure Fonterra “is best placed to respond to a rapidly changing global environment.”
Fonterra called meetings at offices in New Zealand yesterday, including more than 150 staff at its London St office in Hamilton at which the option of voluntary redundancies was mooted, the Waikato Times reported. Some teams were reportedly told they could lose half their number and had been warned against talking to the media.
Today’s statement came after dairy prices sank to a new six-year low overnight, paced by whole milk power, the biggest product by volume that Fonterra sells on the platform. Whole milk powder sank 10.8 percent to US$2,054 a tonne, reaching the lowest since demand was sapped by the global financial crisis. Fonterra has faced criticism from shareholders over its underlying management performance.
Spierings said the review has identified potential areas where the company could “unlock increased value for its owners”, including “significant initiatives in procurement, business operations and working capital.”
“We have the right strategy and the long term future of dairy is sound, however the world is changing and global dairy markets are increasingly volatile,” he said. “To keep ahead of the game, we need to be more agile, reduce costs and generate value.”
Consultation over job cuts globally had started with procurement, finance, information services, human resources, strategy and legal functions, the company said. “Other parts of the business will follow in the coming months.”
Fonterra Shareholders’ Fund units, which are entitled to dividends from the company’s ordinary shares, were last at $4.84 and have dropped 19 percent this year.