Quiet goodbye as woes mount

Fonterra says the latest changes to its management are to provide stability, but the way the news is slowly unfolding appears to be haphazard. As the pressure mounts, Fonterra has dripfed announcements that see key figures depart without properly confronting the dairy giant’s performance.

Back in March, New Zealand’s largest company announced midway through a presentation (where it revealed a $348 million interim loss), that chief executive Theo Spierings was leaving.

Usually such a move would be announced in advance, leaving the impression that its handling was designed to wrong-foot journalists who would have inevitably demanded to know why Spierings, and long-time chairman John Wilson, had not resigned already.

Then in late July, Wilson announced he was stepping down for health reasons, immediately.

We all, no doubt, wish him a swift and full recovery. But only days earlier he had been telling colleagues of a plan to stand again, in the face of a growing political storm.

Now, Fonterra announces an interim head with immediate effect, Miles Hurrell, and that Spierings will step down at the start of September. This comes days after rumours that Fonterra was on the verge of announcing a new chief executive and days after Fonterra cut its payout and dividend, a move that seemed designed to avoid a moralesapping credit rating downgrade.

It appears that neither of the men who were so tied to the strategy of the co-operative will now front up in mid-September to explain its troubled financial performance. A spokesman for Fonterra was unable to say immediately whether Spierings would be at the financial results presentation.

The spokesman was also unable to say when Spierings was last in New Zealand, other than to say the outgoing boss was ‘‘heading back’’ after a period of leave. The spokesman rejected the suggestion that Spierings has been on an extended period of leave recently.

Fonterra now has a New Zealand chairman, and for the time being at least, a New Zealand chief executive. Fonterra’s official line is that with a new chairman it was right to cancel the search for a new CEO to create stability. But if that was the case, why was it not announced when Wilson stepped down, or when Fonterra cut its forecasts?

More importantly, will anyone at the top be in a position to articulate what the company has learned from its troubles?

An alternative reading of yesterday’s announcement is that it is a power-play by new chairman John Monaghan. Hurrell is now in pole position to become the permanent chief executive and Spierings has been marched.

The new chairman and interim CEO take over at a time when confidence in the company appears to be low. ‘‘We’re starting to look a bit amateur,’’ a Fonterra dairy farmer and shareholder said after the announcement.

Are the investors any happier? On Tuesday, units in the Fonterra Shareholder Fund sank to $4.80, which according to Mark Lister, head of private wealth research at Craigs Investment Partners, was the lowest since September 2015.

Asked on Twitter whether this meant it was a good time to buy, Lister said: ‘‘I’m in no rush.’’

Yesterday morning the Fonterra units rose 5 cents, but are still down more than 24 per cent this year, at a time when the NZX 50 index is up about 6 per cent and near all-time highs.

The fall is hardly a surprise given dividends were slashed this month by much more than the milk payout. For a company that has struggled to work out how to get the capital it needs while maintaining its co-operative structure, the move seems to validate concerns that the company will always favour farmers over investors.