Theo Spierings new Fonterra CEO

July 14, 2011

Fonterra has named its new CEO – Theo Spierings, a Dutchman with 25 years experience in the global dairy industry.

Fonterra chair Sir Henry van der Heyden said:

“Mr Spierings has a wealth of experience in managing dairy businesses across Asia, Latin America, Africa, the Middle East and Europe,” Sir Henry said.

“Most importantly, Mr Spierings has an in-built respect for the co-operative structure and for farmers and their commitment to co-operative principles. He is well recognised by his peers for his people leadership, delivery of results and strong strategic skills.”

This will resonate with Fonterra’s shareholders who are resolute in their determination to retain farmer control and the co-operative structure.

Mr Spierings was acting CEO of Royal Friesland Foods when he presided over all aspects of its complex and highly sensitive merger with Campina. He left the company shortly after completing the merger as, prior to the transaction, both parties had already agreed on an independent CEO to take the new entity forward.

Sir Henry said as well as a 25 year history in the global dairy industry, Mr Spierings had held a variety of general management, operations and supply chain and sales and marketing positions across a number of geographies.

Mr Spierings said the role of CEO for Fonterra was a great opportunity, working in the industry he loved.

“I am honoured to be invited to lead Fonterra into its second decade,” Mr Spierings said.

“The Fonterra Board, Andrew Ferrier and his team have established a strong foundation and my challenge is to build an even more successful global dairy co-operative.

Mr Spierings said he was familiar with both Fonterra and its key people and had great respect for the foresight New Zealand farmers had shown in creating Fonterra in the first place.

“A huge amount has been achieved in the past 10 years since Fonterra was established. Trading Among Farmers – the newly approved capital structure – is a good example. But what makes Fonterra really unique is its combination of low-cost pasture based farming and its status as the world’s largest milk processor.”

With the co-operative already performing strongly, Mr Spierings said it was clear that the challenge ahead was to add another layer of value across the business.

“I am used to working for farmers and I know they demand results. Being entrepreneurs themselves, they expect continuous improved performance of both their co-operative and through-out the value chain,” Mr Spierings said.

”I am acutely aware of Fonterra’s importance to the New Zealand economy and look forward to leading an organisation that has the potential to have such a positive impact on its home country. I thrive on the prospect of contributing to Fonterra’s continued success, which I know is of great importance to not only its farmers and employees, but to every New Zealander.”

Mr Spierings, aged 46, holds a Bachelor of Arts-degree in Food Technology/Biotechnology and a Masters in Business Administration. He is married with three children and currently lives in The Netherlands. He owns and runs his own company which focuses on corporate strategy and mergers and acquisitions in fast moving consumer goods.

The 2011 financial year would be a record one for Fonterra and announcing thre results will be one of Andrew Ferrier’s last duties with the co-operative before his successor takes over on September 26.


Still questions on SFF PGW merger

August 22, 2008

The Grant Samuels report on the proposed merger between SIlver Fern Farms and PGG Wrightson is largely positive and includes the expectation that SFF will have a $48m profit for the year.

That’s a $90m improvement after a $42m loss last year.

The report also says the $220m PGW is offering for a 50% stake in SFF is at the top of the range.

The transaction was expected to increase cash-strapped Silver Fern Farm’s equity ratio to 80 percent and enable it to develop a stronger in-market presence and invest in capital projects…

Other benefits of the transaction would include the likelihood of success of Project Rightsize and the upgrade of remaining plants with state-of-the-art technology.

Grant Samuels says in the report PGG Wrightson’s resources and national coverage meant it was uniquely positioned to deliver more stock, and help farmers participate in an integrated supply chain.

However, Silver Fern Farms would have to pay at or above market price to attract and maintain stock supply, with half the company’s profits to flow back to PGG Wrightson.

One question the report doesn’t answer is the imbalance in voting rights between PGW and SFF because of unallocated shares held for new suppliers.

SFF is a co-operative, when new suppliers join they get a portion of unallocated shares which the company holds and can then exercise voting rights they carry.

If the merger goes ahead, PGW will have 50% of the shares and the voting rights which go with them, but SFF suppliers will have 50% minus the unallocated shares and so have fewer votes.

An alternative to that would be to allocate all the shares but then no new suppiers could join the co-operative unless existing shareholders left when they could take over their shares. That wouldn’t be sensible because the capacity for new suppliers would be limited by number of shares relinquished by retiring suppliers.

The only way to ensure that SFF shareholders always have 50% of the voting rights would be to start with them holding half the shares then increase the shareholding of both SFF and PGW with each new supplier so that PGW’s share goes up by the same amount as the new SFF shares.


Positive outlook for meat industry

July 14, 2008

ANZCO Foods chairman Graeme Harrison is confident that the meat industry has a positive future.

He said the industry is not broke and farmers should take a “level headed” approach to its future – because it does have a good future. 

ANZCO, a 24-year-old private company, is the fourth biggest player in the New Zealand sheepmeat market and the second biggest in the beef and veal markets.

It has in the last three years invested $125 million in new plants and upgrades and in food manufacturing expansion, says Harrison, a significant individual shareholder.

“We wouldn’t be making these investments if we didn’t think there was a good future for the business.”

By way of example Harrison says ANZCO has only recorded one loss in its 24 year history – in 1998 – “because of an investment outside New Zealand”.

“I’m sick and tired of all the negative publicity about where the meat industry is…. I’ve got confidence so producers should be taking a very level-headed view of this (debate) instead of being carried away with all the negative publicity.”

When prices are low, costs are rising and balance sheets in the red, it is easy to become pessamistic but I agree that the industry has a bright future.

Harrison says this was the message he gave a recent gathering of producers for ANZCO’s CMP business and he wants to repeat it to all meat growers as they debate the future of their industry.

“The problem sector in the meat industry is lamb and it’s in the South Island because of competition for land use (dairying).

” We have an industry with four players, all with about the same financial strength. Forget about sales turnover and market share … what you actually have is declining livestock numbers and supply is the key to this business. Where companies are similarly resourced clearly you are going to have severe competition. The long and the short of it is, some fallout is going to occur. What we have is livestock supply eroding in sheepmeat at a rate we haven’t seen since the mid-1980s. So clearly there is going to be change.”

Harrison says market forces are at work and farmers are responding to them. The biggest market force is the dairy boom.

“It’s the biggest boom in New Zealand agriculture since the early 1950s.(when dairying converted to sheep, particularly in mid-Canterbury and Southland). We’ve got a reverse of that now but on a bigger scale. Good mixed farming areas are going into dairying and the reason is comparative profitability.

“There’s nothing new about this…but extraordinary things happen in those environments. I’ve been trying to make the point that the meat industry is not broke. There’s been far too much talk about this, though it is true that financial rewards have been poor in the last four years.

“Sooner or later when you have poor returns there will be an effort to rationalise.”

If we still had subsidies we’d probably still have 60 million sheep and a mountain of lamb and mutton deteriorating in freezers. Instead we now have fewer than 40 million sheep and farmers are looking at their options and making rational business decisions based on the markets. Some are persuaded by dairy returns to convert their farms to dairying or dairy support. Others who don’t want to do that are looking at the positive impact dairy prices are having on their own land and selling.  Some still belive there is a future in sheep and beef, which of course there is.

Read the rest of this entry »


Alliance Committed to Co-operative Model

July 9, 2008

While Silver Fern Farms is open to PGG Wrigthson’s offer to take a 50% stake in the company, Alliance Group remains committed to the co-operative model.

Alliance Group chairman Owen Poole said given recent strong feedback from farmer owners, it wanted to keep control of the meat processor with about $1.1 billion in annual sales.

Poole said yesterday Alliance did not want to comment on any industry consolidation discussions it may be involved in.

Last week, listed PGG Wrightson (PGGW) announced it wanted to take 50 per cent ownership of Silver Fern Farms (SFF), formerly PPCS, for $220m, but the plan is dependent on a 75 per cent approval vote by SFF farmers.

Poole did point to media-based “rumours” that this week it would meet Affco, another processor, for informal talks, but he would not comment further.

Last week SFF chair Eion Garden said his company didn’t have a Plan B. Is this a hint from Poole that Alliance might be coming up with one?

Alliance’s board will meet in Invercargill tomorrow.

Poole said any board decisions by the Invercargill co-operative on a response to the PGGW-SFF plan would be kept behind closed doors.

However, the board would give a response at a series of farmer meetings next month.

Poole expected annual farmer returns to improve 30 per cent next season starting from October 1, compared with the existing season, taking some pressure off farmers.

That will take the price of a lamb to somewhere between $75 and $80. Still not at the $100 which is what farmers say they need,  but a definite improvement on last season’s prices of $50 to $60 a head.

He had proposed four months ago a merger of the biggest meat companies to control 80% of the nation’s lamb and beef produce, but talks with SFF fell apart.

Poole said yesterday that 80 per cent level remained the key for any aggregation.

Farmers that had phoned him were strongly against any move away from the co-operative standard.

Alliance shareholders and supplying farmers had been concerned about the new developments, particularly if it would take an industry player away from co-operative status.

This would make the 80 per cent consolidation level widely accepted as a minimum that much harder to reach, he said.

“(But) if there’s opportunity for aggregation under an open model, then we’ve got a very open model.”

He added his phone had been extraordinarily busy from concerned farmers with no enthusiasm at all for the idea of corporate involvement in Alliance ownership.

Fonterra shareholders aren’t keen on diluting farmer ownership of their company. The grapevine is suggesting SFF shareholders are yet to be convinced that losing farmer control will be the best option for the meat industry too. What they say now is not necessarily a reflection on how they will vote later in the year and someone could come up with a Plan B before then anyway.


%d bloggers like this: