Fonterra plans to consolidate specialty cheese production plants after annual net loss

Fonterra Co-operative Group, a New Zealand multinational dairy co-operative, is planning to consolidate its specialty cheese production plants following poor annual financial performance for FY19.

The co-operative, with two specialty cheese production facilities sites operated by Fonterra Brands New Zealand, will move its Te Roto operations to Eltham Bridget Street.

Fonterra announced its FY19 annual results, wherein the Co-operative reported a net loss after tax of NZ$605 million.

The Co-operative’s normalized earnings before interest and tax (EBIT) was NZ$819 million, down 9% while free cashflow was NZ$1,095 million, up 83%, and the return on capital was 5.8%, down from 6.3%.

Fonterra plans to consolidate specialty cheese production plants after annual net loss. Photo courtesy of Fonterra Co-operative Group.

Brett Henshaw– managing director, Fonterra Brands New Zealand said: “We owe it to our farmer shareholders and unit holders to get the best returns we can for them, and having two specialty cheese plants means there’s duplication of costs.

“The specialty cheese business has been losing money in having to run the two sites. This change will consolidate costs and make it sustainable to continue in the category.

“Our priority right now is looking after our people at Te Roto and working through what this announcement means for them.

“This includes looking at redeployment options to our Bridge Street site, as 34 new jobs will be created in Eltham as a result of the planned consolidation.

“In addition, we will be supporting staff to explore other opportunities at other Fonterra sites.”

Currently, Fonterra’s Te Roto facility employs 65 people.

Carried out in phases, the transition of specialty cheese making operations to Bridge Street, Eltham, is expected to be completed by the end of April next year.