New chief executive Miles Hurrell at the Fonterra offices on Fanshawe St, Auckland. Photo / File
Our business hero for 2022 has been at the sharp end of turning around Fonterra, New Zealand’s biggest exporter.
Miles Hurrell, who came up through the ranks to lead Fonterra, has been instrumental in getting the co-op back on to an even keel after a turbulent few years.
On Hurrell’s appointment in 2019, the then chairman John Monaghan said Fonterra’s performance was not something that would be fixed overnight.
“It will require the courage to make difficult decisions, be up-front with farmer-owners, unit holders and other stakeholders, and instil a culture of accountability and performance right across the organisation,” Monaghan said at the time.
Hurrell first joined Fonterra in 2000.
His 19 years’ experience in the dairy industry spanned four continents, including roles in Europe, the United States, Middle East, Africa and Russia.
Before taking up the role of interim CEO, Hurrell was the co-op’s chief operating officer of Farm Source, Fonterra’s retail and rural services arm.
The job at Farm Source meant Hurrell was well-known among farmers, so he was a popular choice for CEO.
His appointment came after a dismal few years for the co-op.
There was the false botulinum scare of 2013, which prompted Fonterra to conduct a widespread and expensive product recall.
Then there was the string of ill-advised investments, such as a minority stake in China’s Beingmate, which weighed heavily on the company.
Profitability was patchy at best.
With Hurrell newly installed as CEO, Fonterra reported a net loss of $605 million for the 2019 year, driven mostly by writedowns as the company cleaned up its books.
The ensuing years have been about offloading equity interests and making the co-op leaner.
Fonterra has re-focused on its core business and has emphasised its strong point - New Zealand milk.
The co-op adopted a more customer-led operating model and strengthened its balance sheet. In September it delivered a $583m full-year profit - a massive turnaround from three years ago.
In an update this week, Fonterra upgraded its earnings guidance after a strong start to the 2023 financial year.
The co-op has elevated its current-year earnings guidance to 50-70 cents per share from 45-60c. It has lowered and narrowed the milk price range to $8.50-$9.50 per kgMS, with a midpoint of $9.
Fonterra’s first-quarter earnings before interest and tax (Ebit) shot up by 94 per cent to $368m.
Fonterra took out the Most Improved Performance award at the 2022 Deloitte Top 200 Awards held this week. The dairy co-operative, owned by 10,000 farmers, paid close to $14 billion to its dairy farmer suppliers this year. The judges noted positive improvements across the business driven by a refreshed, local management team.
“Fonterra sometimes faces vocal opposition to their industry,” the judges say. “But they have made moves to become more sustainable and have recently introduced a bovine emissions reduction plan along with trialling seaweed as a supplemental feed for dairy cows, and are working with government on reducing permanent agricultural emissions.”
Fonterra is very near the end of its asset sales programme, having just agreed to sell its Soprole business in Chile for just over $1b.
In 2019, it sold icecream maker Tip Top to Froneri, a joint venture between Nestle and PAI Partners, for $380m.
In 2020, it sold stakes in DFE Pharma and Foodspring for $623m.
The company has exited its investments in China Farms and its ill-fated stake in China’s Beingmate.
In terms of asset sales, the last cab off the rank will be its 51 per cent stake in Brazil’s Dairy Partners Americas (DPA).
Asked at Fieldays if he felt the Fonterra ship had been turned around, Hurrell said: “I feel proud of what our team has been able to achieve over the last few years.
“It has been tough, firstly for our farmer shareholders, and staff, and our unit-holders as well.”
Hurrell said he felt Fonterra was now “where it needs to be”.
“That said, there is huge opportunity out there.
“We are a small player in a big world, so as of now we are starting to focus on the growth model and how we start to look beyond New Zealand, and ask how we can grow the business.”
In terms of future possibilities, Hurrell said dairy can play an important role in health and wellbeing.
“Whether it be preventative or cure, we think dairy has some unique properties.”
Fonterra already invests heavily in research and development, and Hurrell says that’s where the next wave of significant value for the company will come from.
Hurrell said at the release of Fonterra’s last financial result that despite the challenges of increased costs associated with supply chain volatility, 2021/22 was a good year.
“These results demonstrate that our decisions relating to product mix, market diversification, quality products and resilient supply chain, mean the co-op is able to deliver both a strong milk price and robust financial performance in a tough global operating environment,” he said then.
While the co-op’s asset sales programme has been extensive, Fonterra has retained its Australian operation, which it had under review.
Fonterra had talked of returning $1b to shareholders as a result of its assets sales.
Following the decision to retain the Australian business, analysts expect the return to be more like $600m to $700m.
Eleven years after founding Partners Life with all her savings Naomi Ballantyne sold it this year for $1b to Japanese life insurer Dai-ichi Life Holdings.
The sale was one of the biggest deals to happen in New Zealand this year and while Ballantyne will only get a small portion of the proceeds, she says she will be very comfortable for the rest of her life and has no plans to launch another start-up.
Partners Life is the second start-up for Ballantyne, who sold ClubLife to ING in 2009 just 15 months after starting the business. She previously worked for Sovereign before it was sold to ASB.
Ballantyne dropped out of a marine biology degree at age 19 to go into insurance as a management trainee. She applied for the job after realising there weren’t many career opportunities for marine biologists and she couldn’t afford to be a married student.
In 2016 she was made an Officer of the New Zealand Order of Merit in the New Year Honours for services to business.
Ballantyne has been a key driver of innovation in the insurance industry during her career.
Partners Life has more than 260 staff and is the second-largest life insurer in New Zealand. Accounts show it made an underlying insurance profit of $23.7m in the year to March 31, 2022 which was down from $30.77m in the prior financial year. It had net assets of $673.3m.
Ballantyne remains working for Partners Life and has said she will look to help the company with developing other markets.
Vulcan Steel has enjoyed a strong growth trajectory, culminating in a successful IPO and dual listing last year, led by CEO and managing director Rhys Jones.
In its first year as a listed entity, Vulcan’s full-year profit increased by 91 per cent to $124m while its revenue rose 33 per cent to $972.7m, up from $731.5m a year earlier.
“It’s been an exciting time,” Jones told the Herald in a recent interview ahead of the Deloitte Top 200 awards where Vulcan was crowned Company of the Year.
“Going through the float there were massive challenges with Covid but overall it’s been a fantastic journey for our team.”
Vulcan is a relative newcomer in the steel industry, starting life in 1995 in a garage in East Tamaki with two trucks and a Portacom.
Founded by Peter Wells, the company has grown significantly over the past 25 years, both organically and through acquisitions, and disturbing the local duopoly of Steel & Tube and Fletcher Building.
By market cap, the company today is worth $1.2b and has about 1500 employees.
Having successfully integrated three major acquisitions between 2014 and 2020, Vulcan announced in July this year the acquisition of Ullrich Aluminium.
The buyout, completed in August for $165m, adds synergies and gives Vulcan the opportunity to expand into the aluminium distribution market.
Jones joined Vulcan in 2006 having previously held several management positions within the steel industry, including at Fletcher EasySteel NZ, Pacific Steel and Wiremakers and at Carter Holt Harvey at the time of the Rank Group takeover.
Jones said in the interview with the Herald that, during Covid, no one was laid off and full pay was maintained.
“As a whole team, we said ‘right, we are going to face this challenge together’ and that has led to a whole lot of loyalty.”
High inflation is a problem he acknowledges and one not easily solved.
“My personal view is that it’s going to be a very difficult period in the near future with rising inflation.”
Engineer and businessman Shane Brealey, aged 60, is on a mission. Earlier this year he spent eight weeks touring European build-to-rent projects to inform the system he’s devising. He hopes that one day the world will beat a path to our shores “to ask questions about the model we’ve developed in little old New Zealand”.
Brealey’s plan for build-to-rent housing, cooked up with his wife Anna and not-for-profit pension-funds honcho Sam Stubbs of Simplicity, falls somewhere between the flash Canary Wharf apartments he toured in London and the uninspiring state-funded German projects he saw.
Shane and Anna Brealey are now halfway through a transition from running their private building business, NZ Living, to running Simplicity Living, a real estate developer and builder specialising in a start-to-finish approach - from land development to property management - all owned by Simplicity and funded by its KiwiSaver members.
Simplicity is buying, at book value, NZ Living’s remaining build projects, which will be complete next year. The rest of the company will roll into Simplicity Living as a gift. The Brealeys will come too; they’ve agreed to run Simplicity Living for the next five to 10 years pro bono.
“Life has been good to us,” Brealey says from his home on Waiheke Island. “We have enough to do everything we want to do for the rest of our lives … we’re lucky enough to be able to just help.”
Brealey aims to strip some 20 per cent of the cost of developing land and building through a focus on cutting unnecessary costs and by using direct financing, and avoiding developers’ and builders’ margins.
It’s a business plan that’ll plough profits back to its pension fund owners, and will aim, once the development phase yields homes, to prioritise high occupancy and long tenure over high rent.
Stubbs and the Brealeys reckon they can build 10,000 new homes for long-term rental in the next decade, something New Zealand’s tight, expensive and often insecure market is in dire need of.
Twenty years after becoming the first female chief executive of a major New Zealand public company, Theresa Gattung has turned her attention to philanthropy.
She and her sister Angela recently launched a multimillion-dollar charitable foundation to work in key areas of need, putting an official stamp on work they have been doing for years.
Gattung, who led Telecom from 1999 to 2007, won’t put an exact figure on what the Gattung Foundation will give away, other than to say it will be in the “tens of millions of dollars”.
The foundation is concentrating on key areas – supporting education and learning opportunities for young women, supporting families in need, relieving poverty through grassroots support, lifting women out of situations of inequality, hardship or violence, and improving the care and protection of animals.
In particular, they want to help address an imbalance of educational and professional opportunities for young Māori and Pasifika women, and are already supporting established charities working in that area.
They want to make sure that if young Māori and Pasifika women want to study for a university degree, lack of money is not standing in the way.
In a recent Herald interview Gattung talked about a “lost group of girls” - disengaged teenagers in low-ranking socio-economic areas who have dropped out of school, many getting jobs to help support their families after hardships brought on by Covid-19 and lockdowns.
She believes that what happens in childhood and adolescence has a huge influence on the rest of people’s lives. If a career and work trajectory is derailed, the chances of a prosperous future are also derailed.
“Young women, they need to envisage a different future for themselves than just continuing to pack shelves at the supermarket.”
She wants to put good female role models in front of these women.
The new foundation is already supporting nearly 40 initiatives, and there will be more to come.
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