Fonterra, the New Zealand-based dairy giant, has announced plans to cut 523 jobs over the coming months in a bid to improve cash flows and maintain profit as the global dairy market continues to deteriorate.
The decline in global dairy prices shows no sign of abating after the results from the latest Global Dairy Trade (GDT) auction were particularly brutal with prices falling 10.7% – the ninth consecutive fall in the GDT since mid-March. The GDT index now stands at 556, which is lower than 2009 levels.
Fonterra chief executive Theo Spierings said the decision to reduce staff numbers would result in a one-off cost of NZ$12m to NZ15m to the company but would generate payroll savings up to NZ$60m (€36m) per annum.
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Fonterra said it would continue to make changes within its business in order to stay relevant and remain “strongly competitive” within today’s global dairy market. The world’s largest milk processor also said it had identified savings of NZ$5m (€3m) within its supply chain as a result of new logistics solutions.
Suppliers
This latest news will do little to reassure New Zealand milk suppliers before the Board of Fonterra meets in the first week of August to consider its current milk price forecast for the 2015/16 season, which is just getting underway.
Fonterra’s milk forecast currently stands at NZ$5.25/kg of milk solids (21.7 c/l) but is under significant downward pressure as the GDT index continues to slide.
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Fonterra, the New Zealand-based dairy giant, has announced plans to cut 523 jobs over the coming months in a bid to improve cash flows and maintain profit as the global dairy market continues to deteriorate.
The decline in global dairy prices shows no sign of abating after the results from the latest Global Dairy Trade (GDT) auction were particularly brutal with prices falling 10.7% – the ninth consecutive fall in the GDT since mid-March. The GDT index now stands at 556, which is lower than 2009 levels.
Fonterra chief executive Theo Spierings said the decision to reduce staff numbers would result in a one-off cost of NZ$12m to NZ15m to the company but would generate payroll savings up to NZ$60m (€36m) per annum.
Fonterra said it would continue to make changes within its business in order to stay relevant and remain “strongly competitive” within today’s global dairy market. The world’s largest milk processor also said it had identified savings of NZ$5m (€3m) within its supply chain as a result of new logistics solutions.
Suppliers
This latest news will do little to reassure New Zealand milk suppliers before the Board of Fonterra meets in the first week of August to consider its current milk price forecast for the 2015/16 season, which is just getting underway.
Fonterra’s milk forecast currently stands at NZ$5.25/kg of milk solids (21.7 c/l) but is under significant downward pressure as the GDT index continues to slide.
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