Fonterra achieved 75-80% of its statement of intentions for the 2021 financial year in the categories of healthy business and healthy environment, but fell much shorter in the healthy people category.
Fonterra achieved 75-80% of its statement of intentions for the 2021 financial year in the categories of healthy business and healthy environment, but fell much shorter in the healthy people category.
The targets and achievements were summarised in the Fonterra Co-operative Council’s October report to shareholders, ahead of its annual report due out later this month.
The business targets met were the milk price of $7.54/kg, about $1 ahead of the intention, return of capital of 6.6%, debt ratio down to 2.7, gearing ratio of 35.5% and 34c earnings per share at the top of the guidance range.
The one target not met concerned a further drop in Fonterra’s market share of milk collection from 80% down to 79%.
Fonterra has fallen behind its targets for reduction in water use at company sites, along with work injuries, female representation in senior leadership and employee engagement.
Overall, nine of 14 targets were met.
The council will make more comments on this scorecard in its annual report.
It has already commended the board for the recent progress by the co-operative and said that recent independent research indicated that 82% of members are more comfortable with the direction of the co-op than they were two or three years ago.
“Complementing that data, we have accumulated considerable feedback that members are very supportive of the transformation in culture they have perceived within Fonterra,” the council said.
Chair James Barron has published the first annual letter of expectations sent to the board of directors by the council after consulting with members.
The subject areas are culture, performance, investment and pride in the co-operative.
Under culture, the shareholders expect openness, honesty and transparency; genuine consultation on matters that affect their interests; and a culture where mistakes are acknowledged and lessons learned are shared.
Under performance, farmers expect the highest possible milk price; a respect for capital that is allocated and managed effectively; and for investment into innovation.
While happy with the new focus on New Zealand milk, farmers want as much transparency as possible on investment decisions.
Under the heading of pride, the council emphasised generational sustainability; good corporate citizenship; work on the public perception of dairying and on a workable, science-based regulatory environment.
Barron says the letter did not seek to interfere in any way with the role and authority of the board to govern Fonterra.
The expectations are consistent with Fonterra’s stated purpose.
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