Hurrell appointed to lead Fonterra

Miles Hurrell
Miles Hurrell
Miles Hurrell has been permanently appointed as Fonterra's chief executive.

Previously chief operating officer of the co-operative's Farm Source, he was appointed interim chief executive following the departure of Theo Spierings last year.

In a statement yesterday, chairman John Monaghan said the board had been impressed by Mr Hurrell's leadership and commercial skills as it continued to ''breathe fresh air'' into the co-operative.

''Miles has been performing well under difficult circumstances. Our performance is not something that will be fixed overnight.

''It will require the courage to make difficult decisions, be upfront with farmer-owners, unit holders and other stakeholders, and instil a culture of accountability and performance right across the organisation.

''Miles has demonstrated the wisdom, skills, experience and frankly, the backbone needed to lead. His permanent appointment will bring much needed stability to the co-op and our people during a critical period of change,'' Mr Monaghan said.

Mr Hurrell joined Fonterra in 2000 and his experience in the dairy industry included roles in Europe, the United States, Middle East, Africa and Russia.

Mr Hurrell recently said the underlying performance of Fonterra's business was ''not where it needs to be''.

The board has undertaken a full review of its strategy and an update on both the strategy and progress made on a portfolio review was signalled when the interim results were announced on March 20.

Yesterday, he said his six months as interim chief executive had reinforced his view that, despite the challenges with current performance, the fundamentals of the business were strong.

''To realise our potential, we need to get the basics right and that means a full review of our strategy and ultimately, a fundamental change in direction,'' he said.

In the statement, Fonterra said Mr Hurrell would be paid a base salary of $1.95million, with additional short and long-term incentive payments, based on the achievement of targets agreed with the board.

His total remuneration package would be reported in the co-operative's annual financial statements in September.

Mr Spierings, who exited the company in September, earned $8million in the 2017 financial year, and $3.5million in the 2018 year.

Meanwhile, Fitch Ratings has put Fonterra on notice over its credit rating, saying its asset sale programme would be critical in getting debt under control.

The international ratings agency this week downgraded the outlook on Fonterra's ''A'' long-term issuer default rating to ''negative'', from a previous ''stable'' outlook.

Fitch said last week's earnings downgrade indicated that Fonterra was facing structural issues that it needed to deal with if it wanted to keep the defensive traits protecting its business profile.

The suspension of the interim dividend and proviso that any final dividend would depend on Fonterra's end-of-year balance sheet was a positive for bondholders, as was the ongoing strategic review.

That included the divestment of assets no longer deemed core to the wider business, such as the sale of Tip Top. The Australian newspaper reported this week that Australian packaging billionaire Raphael Geminder and Kiwi billionaire Graeme Hart were in the mix as potential buyers of the ice cream business.

- Additional reporting BusinessDesk

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