- New Zealand and Australian dairy company Fonterra posted one of its worst announcements ever this morning, revealing $602 million in losses for the 2019 financial year — its worst ever
- The company isn’t scared to back down however, responding to losses with a revamped global business model
- Fonterra will now focus on regions in the Asia Pacific, China, Africa, Middle East, Europe, North Asia and the Americas
- Despite the huge losses during the financial year, the company remains intact on the ASX this morning with a 1.32 per cent boost in share prices
Dairy company Fonterra is looking to shake up its global business, in a bid to scale back on losses during the financial year.
Posting $602 million in net losses for 2019 financial year this morning, its biggest downgrade in history, the company has vowed to revamp its global business division.
Speaking to shareholders, including dairy farmers, company CEO Miles Hurrell announced the company will hone in on seven specific regions of business. Asia Pacific, China, Africa, Middle East, Europe, North Asia and the Americas.
“As we do every year, we took a hard look at our asset valuations and future earnings potential,” Miles said.
“When it came to [Dairy Partners Americas], Fonterra Brands New Zealand and China Farms, we saw there were either some changes in their local economies, increased competition or business challenges impacting their forecast earnings.”
Leaders for each region have already been announced. Miles pointed out Judith Swales will act as CEO for Asia Pacific, with Kelvin Wickham taking the reins in the Americas.
The company is currently searching for a CEO and Chief Operating Officer for the Greater China division of business.
Miles said the new strategy for the 2020 financial year will see the company rationalise off-shore milk pools.
“Our strategy will see us focus on world-class dairy ingredients for our customers around the world, and innovative ingredients that meet nutrition needs right across people’s life stages,” he said.
“We will focus on ingredient categories: Paediatrics, Medical and Ageing, Sports and Active, and Core Dairy.”
“This will include building on our foodservice success in China and developing new markets, particularly in Asia Pacific.”
As well, despite posting its worst losses ever, the company was able to over-achieve its earnings guidance per share.
Normalised earnings per share for the company achieved 17 cents, ranking above previous forecasts of 10-15 cents per share.
However, the losses during the period meant the company was unable to dish out dividends.
Shareholders have responded positively to the company’s announcement this morning though, despite the shaking loss of profits, with shares boosting 1.32 per cent on the ASX.
While a marginal change to shares sitting at $3.07 apiece, it’s a sign of positive feedback to the $309.4 market cap company looking to make a change.