Fonterra Co-operative Group said about 300 jobs from its head
office in Auckland would go after a review of its support
services, saving the company $65 million, or $216,666 per
position, a year.
Fonterra signalled the job losses when the review started in
May. The review is expected to be completed by October once
people have worked out notice periods, Fonterra said.
Chief executive Theo Spierings said the review had identified
opportunities to reduce duplication and layers of management
within the corporate office and opportunities to progress
Fonterra's strategy implementation.
"We are investing in growth and it is important to ensure our
people are working on the right things and that we are
spending our capital on the right priorities," he said in a
statement. "We are confident the review has achieved this."
It was the biggest management shakeup under Spierings, who
took over from the previous chief executive, Andrew Ferrier,
When Fonterra first announced its intentions in May, the
price of units in the Fonterra Shareholders Fund (FSF) spiked
up by 2.5 per cent to just over $8.00. The price has since
retreated, with the units trading today at $7.40, up 2c from
Fonterra, which imposed a hiring freeze in February, said in
May the $65m in cost savings would add to the $60m of cost
cutting already targeted for 2013.
One fund manager said the benefits of cost savings would most
likely end up with the farmer-suppliers, rather than the unit
holders. He said unit holders would benefit, up to a point,
from a leaner, more focused, business. "But my understanding
is that the bulk of those gains go back to the farmer
supplier, rather than the FSF shareholders," he said.
The announcement marks the biggest layoff at the dairy giant
since it cut workers in 2006 with the closure of
manufacturing plants. Fonterra's total workforce is about
In May, Fonterra announced a shakeup of its Asia
Pacific/Middle East/Africa unit with the departure of
managing director Mark Wilson.
In March, Fonterra posted a 32 percent gain in first-half
profit to $449m. In May Fonterra raised its forecast farmgate
milk price of $7.00 per kg of milksolids - a $1.20 per kg, or
20.7 per cent, improvement on the 2012/13 season's forecast