Fonterra scraps 523 jobs as part of major overhaul of business

Fonterra CEO Theo Spierings announced Thursday that the New Zealand dairy giant axed 523 jobs as part of a major overhaul of its business and more cuts are possible as it struggles with falling dairy prices.

Spierings said the news had been unsettling for the people affected, but the company had to change if it was to remain strongly competitive. "Reducing the number of roles in our business isn't about individual competency. It is about continually improving the way we deliver performance."

Affected staff will begin to leave the firm in September.

The dairy firm said the one-off 12 to 15 million NZ dollars cost of laying off the staff would bring ongoing savings of 55 to 60 million NZ dollars per year.

The jobs are understood to be from central procurement, finance, information services, human resources, strategy and legal teams.

Staff have also been told that on Aug. 5, the company will begin consultation on new structures in numerous other divisions including sales, marketing, research and development, communications, health and safety, and food quality.

The main goals of the overhaul include focusing on cash flow, and implementing sustainable measures for efficiency.

Previously, Spierings said the jobs review was aimed at helping generate cash to help farmers struggling with the low payout environment.

The news came the day after a disastrous ninth consecutive fall in dairy prices at the latest GlobalDairyTrade auction overnight.

Fonterra shares were unchanged at 4.75 NZ dollars following the announcement.

The dairy giant is the world's largest exporter of dairy products, which is collectively owned by 13,000 New Zealand farmers. Endi