Fonterra CEO Resigns as Dairy Giant Announces Gross Loss in H1 Results

NEW ZEALAND - Fonterra CEO has resigned and is to step down later this year as Theo Speirings held the helm of the world's largest dairy exporting company for nearly seven years, a statement said on Wednesday.
calendar icon 21 March 2018
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Fonterra says that its board and Mr Spierings had formally commenced succession discussions last year, ruling out connections between the decision and the cooperatives' NZ$348 million ($250 million) loss after tax in the first half results ending 31 January.

Fonterra Chairman John Wilson says the board was taking the decision to bring forward the announcement, which the board was expecting to make in April, to avoid speculation.

"Theo has delivered extraordinary value," Mr Wilson told the press, noting that the decision was not a reaction to the cooperative's performance and Mr Spierings would continue in the role until a new chief executive was appointed.

Mr Wilson announced Fonterra's first half results on the same day, showing hefty loss blamed on one-off Danone settlement in a lawsuit in relation to a Fonterra's precautionary recall of whey protein in August 2013.

The loss was also attributed to a write-down of the value of its Beingmate investment by $405 million to $244 million. Beingmate, which develops and sells children's food and infant milk formula in China, in January downgraded its earnings for 2017 to a loss of $171 to 214 million.

"As these are one-off events, our normalized net profit after tax of $248 million is a better reflection of our underlying operating performance for the half year," said Mr Wilson, adding that shareholders will be rightfully disappointed with this outcome and Beingmate's continued under-performance is "unacceptable".

The outgoing Mr Spierings said his seven years with Fonterra had been "quite a ride" but Fonterra remains at the top of the dairy world. "Fonterra remains close to my heart," he said.

Mr Spierings prided himself in having established a strong demand-led strategy and oriented itself to become innovative and sustainable. "It is now time for a new CEO who can lead the co-operative through this next phase."

"It is also the right time for me personally. I look forward to new challenges," he said as the board was now shortlisting candidates, according to Fonterra.

"It is not yet clear exactly when any appointment for Theo's replacement will be made, but it is absolutely clear that Theo will continue in the meantime to drive the co-operative's strategy and business, with special emphasis on China," said Mr Wilson.

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