August 15, 2018

Fonterra appoints interim CEO following tough year for co-operative
 

Fonterra Co-operative Group (FCG) has announced that Miles Hurrell will take over as the co-operative's interim chief executive with immediate effect.

Hurrell is currently Fonterra's chief operating officer of Farm Source - a unit which is responsible for working directly with the co-operative's farmer-owners. In that role, he is responsible for Fonterra's global farming strategy that includes farmer services and engagement, milk sourcing and the chain of 70 Farm Source™ rural retail stores throughout New Zealand.

Hurrell first joined the co-operative in 2000. His 18 years of experiences in the dairy industry has spanned four continents, including roles in Europe, the US, Middle East, Africa and Russia.

Meanwhile, Fonterra chairman John Monaghan said the co-operative's board is clear that it is not best practice to have the chairman and CEO stand down at the same time; however, events have "overtaken that decision."

"I have agreed with the board that we will stop the global CEO search while we review the co-operative's current portfolio and direction," he commented. "It is important that we give ourselves the time to take stock of where we are as a co-operative, breathe some fresh air into the business, then determine any changes that are needed.

Monaghan added that Fonterra needs a new leader who can "hit the ground running."

"[Miles] has a deep understanding of our business and has demonstrated his ability to manage large, complex business units in most of our global markets. [He] is well-respected both within our co-operative and by our key global customers and wider stakeholders," he remarked.

"As a group, we haven't always got everything right. Those lessons will be invaluable as we face up to challenges that are in front of us," Hurrell said. "We are already a number of weeks into our new financial year, so I'm keen to get straight into it and ensure the business lives up to the commitments it has made to our farmers and unit holders for the year ahead."

According to Monaghan, Fonterra's board and outgoing CEO Theo Spierings had agreed it was the right time for the latter to step down as CEO.

Spierings would work with Hurrell to ensure a smooth transition of leadership through to September 1.

The announcement of Hurrell's appointment came as Fonterra stopped a global search for Spierings' replacement. The co-operative also revealed that it had slashed its dividend this year - a development which was greeted with "absolute disappointment" by the Fonterra Shareholder's Council which represents farmer shareholders.

Spierings made known his departure in March, on the same day Fonterra announced it was taking a $405 million writedown on its disastrous 18.8% investment in Beingmate Baby & Child Food Co., which was acquired in 2015 for NZD756 million (US$496 million), interest.co.nz reported.   

Beingmate made a loss this year of about NZD208 million (US$136.5 million). The Beingmate investment was led by and championed by Spierings who called it a "game-changer."

Fonterra's recent confirmation that it suffered a bad financial year (ending in July) appeared to be driving force for Hurrell's appointment.

- Fonterra / interest.co.nz