Rural News
Fonterra eyeing a back to basics strategy
14th Jan 09, 2:07pm
by
Fonterra wants to double its added-value returns to farmers 50-80c a kg/ms by 2011, and at the same time reduce the company's 55% debt-to-equity ratio to 40-45%. The company's chief executive Andrew Ferrier hopes to do this by going back to basics, producing "low cost, high quality milk", Business Day reported. The newspaper said today it had obtained a copy of Fonterra's new three-year business plan due for public release at the end of the month.
In the wake of an abortive capital restructure that would have provided for Fonterra to expand its business internationally, the cooperative has had to scale back ambitions and place its focus on quality and efficiency. Fonterra wanted to make $175 million in cost savings from farm gate to consumer, partly through more use of rail, and an internet-based auction system for transport as part of $750 million spending on its domestic supply chain network.
And it is tightening its product focus to five priority areas with business opportunities of around $75 billion in sales: cheeses and culture products (such as yoghurt), food service industry products such as pizza cheese and sundae mixes, paediatric nutritional products and health ingredients, such as ingredients for sports and medical foods.
Fonterra is looking to drive double-digit earnings growth every year for three years in Australasia, and for similar increases in sales revenue in Asia, Africa and the Middle East.
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