Nearly a year into his job as chief executive of Fonterra, Miles Hurrell is a man on a very public mission.
Since late last year, the co-op has been pulling out all the stops to streamline itself, improve earnings and trim debt.
There has been no shortage of criticism and there's a lot at stake. The livelihoods of about 10,000 farmer-shareholders depend on it, and Fonterra is New Zealand's biggest exporter by far.
Stung by the co-op's first-ever loss last year, Hurrell's job is to turn around the supertanker that is Fonterra.
Early this month, Fonterra's sharemarket-traded units slumped to a record low of $3.51 amid the controversial sale of debt-laden Westland Milk to China's Yili, and widely published commentary from independent economist Peter Fraser and others on Fonterra's poor performance.
The share price has since recovered some ground, but it remains weak.
Hurrell was out of the country at the time, so it was up to chief financial officer Marc Rivers to field inquiries about the sudden share slump.
In a statement, he said the fundamentals of the business remained strong but that the co-op's performance was not where it needed to be.
Hurrell concedes that the share price fall may have been in response to a news vacuum, but he is confident that Fonterra is where it needs to be as it goes through the process of reshaping itself.
Come September, when the company releases its annual result, all will be revealed.
By that time Hurrell will have been in the top job for a year, after starting as interim chief executive last August before being appointed to the role permanently in March.
In the meantime, he tries to convey the "flavour" of Fonterra's strategic journey as it seeks a return to investors' and farmers' favour.
For Hurrell, the first key step along the way was dropping Fonterra's ambition to achieve $35 billion in revenue by 2025 from the equivalent of 30 billion litres of liquid milk (LME). That would have been a hefty increase from last year's $20.4b from 22.2 billion litres.
"I believe that that was driving parts of the business in the wrong direction," Hurrell says.
"So very early on we came out with the dropping of the volume-based ambition to get our focus more on delivering value.
"We felt we had to look at some of the previous investments we had made against the background the volume-based ambition.
"Some of the investments had been made on the basis that volume was going to escalate."
In other words, it's a shift away from the old "mile wide, inch deep" approach.
"Our job is to be more focused as an organisation, as opposed to a volume-based ambition that required us to be in every corner of the world."
That previous drive to lift volume took priority over the co-op's gross margin.
"That's not what we're here to do," says Hurrell. "We're here to deliver value back to our farmers and unit holders.
"In addition, to meet our volume-based ambition of 30 billion LME by 2025, we would have had to grow our milk volumes by around 35 per cent over the next five years."
That kind of growth would have meant significant investment in overseas milk pools, and it was having a big influence on decisions within the business.
"By removing the volume ambition, we removed any confusion.
"We're not about being big for the sake of it. Our focus is on value, and when our teams go after something it's got to be with a value lens first and foremost."
What followed was a three-point plan: taking stock of Fonterra's business, conducting a portfolio review and improving its forecasting.
Selling assets
In May, Fonterra sold its TipTop icecream business to global dairy giant Froneri for $380m - $100m above its book value.
DFE Pharma, a 50/50 joint venture established in 2006 between Fonterra and FrieslandCampina, is also up for sale.
"That process is well-advanced and we will be in a position to discuss that over the next month or two."
And having disentangled itself from business joint ventures with China's Beingmate, it now just has a stand-alone 18.8 per cent equity stake.
Fonterra will look at a range of options for Beingmate - reducing that stake, selling outright, or partnering with another player.
"China Farms is under a strategic review process as well and we are looking at a number of options, including partnership with some local companies or an outright sale."
Again, Fonterra expects to be able to update the China Farms issue over the coming months.
In Brazil, Fonterra has a successful yoghurt joint venture partnership with Nestle, called Dairy Partners Americas, which is also under review. Hurrell says Fonterra will soon reveal the options for that venture.
Fonterra's asset sales are aimed at reducing its debt load by $800 million and staying on the right side of its credit rating agencies.
Hurrell says capital expenditure was something Fonterra needed to get on top of very early in the reform process. Last year, that spending totalled $850m spread across the business.
In the preceding five years, the average was about $1b.
"This year we are well on track to be less than $650m," Hurrell says.
"There is now more discipline as to how we spend our owners' capital."
As for getting operating expenses down, Hurrell says Fonterra is running ahead of target.
It closed its Dennington plant in Western Victoria in May and has got out of its Venezuelan business.
The co-op has also had a close look at its forecasting and is using new tools to do a better job.
"It is an inherently difficult industry to forecast and dairy prices are one of the most volatile markets to try and predict."
And then there is the weather, which has an impact on price.
Fonterra's strategic review is aimed at simplifying the agenda and focusing back on New Zealand milk.
All up, it's a complete re-shaping of Fonterra's business.
So is Hurrell happy with progress to date? "Yes I am, 100 per cent."
Lessons from Westland
While he is comfortable with the progress that Fonterra has made, Hurrell is under no illusions.
"We know that the performance over the last year or two has not been where it needs to be."
Hurrell declines to be drawn on Westland's demise in any detail, but says it was disappointing to see a co-op go.
"We are a strong advocate for the co-operative model, clearly, and it leaves only two co-operatives in the dairy space in New Zealand." (The other is Waikato's Tatua.)
"We still absolutely believe that the co-operative model is the right model," he says.
"What it requires you to do is pay a competitive milk price and to ensure that we can provide a return on investment."
In Fonterra's case, it's the return that has been lacking.
As Hurrell sees it, Westland's problem was not necessarily related to the co-operative model - the same would apply to any business.
"If you are going to spend significant capital on new business strategies or structures, then you have got to ensure that your balance sheet is strong enough to handle the downside risk to that.
"In our own context, we recognise that our own balance sheet needs more strength to it."
Could Fonterra go Westland's way? "We're in a completely different situation — we have a strong credit rating and a plan in place to lift our performance which is progressing well. There's no doubt there will be bumps along the way, but we're confident we'll turn our performance around."
In Fonterra's case, the headlines have been dominated by its ill-fated stake in Beingmate and its heavy investment in setting up a large dairy operation in China.
"We have made two large strategic decisions in the last five to10 years which required heavy capital investment and both of which have not delivered, and they have become high profile as a result of that.
"On the plus side, some businesses are doing phenomenally well. It's just that they are not as high profile and not on the negative side of the ledger.
"What we are trying to signal today is that a number of pieces to the puzzle are already out there that are starting to come together.
"At the core of it is sustainability of our strategic direction going forward."
Down on the farm
Amid all this strategising, the people with most at stake are Fonterra's farmers. Having previously headed Fonterra's farmer support company, Farm Source, Hurrell has met many of them face to face, which has done him no harm.
"I think farmers have certainly given him plenty of rope to play with," says one industry source.
"But their patience will quickly run out if big progress is not made soon."
As Hurrell sees it: "Our farmers are giving us the freedom to get on and do that, but there comes a time when they will want some delivery and we acknowledge that."
Looking further out, Fonterra will be focusing on those areas where it believes it has the opportunity to win.
In the big picture, the outlook looks good. "The demographics are all in our favour - a growing middle class in Asia and Africa, where consumption of dairy continues to rise.
"At the base level, the foundations are fantastic.
"We have still to get the performance up to where I believe it can to give confidence to our farmers.
"There will be some ups and downs during the clean-up process but on the back of that, I think the business is in great shape."
In terms of the world commodities markets, the supply and demand dynamic looks favourable.
Despite a slowdown in China's growth, demand for Fonterra's products remains strong in the People's Republic.
Meanwhile, the milk price has remained firm. Fonterra farmers are in their third year, and what is forecast to be a fourth, of milk prices at $6.00/kg or more.
"That's a comfort on one hand, but banks are putting more pressure on, environmental pressures are coming on, and there is the rising cost of compliance.
"A change in equity as a result of the share price has certainly not helped, so we acknowledge all of that.
"Our job is to stay as close to our farmers as we can to get them through, but the fundamentals are very strong."
Facing the flak
Hurrell knows Fonterra will always attract attention from commentators. "I'm under no illusion that the role that we play in New Zealand puts us under all sorts of scrutiny.
"We don't hide from that - it comes with the territory.
"I just ask readers to ensure that they get a balanced view and not simply take a view from someone who may have a vested interest elsewhere.
"I'm not going to comment specifically on certain commentators, but people have views and often those views are there for a reason.
"We've seen that in the past and with the role that we play in New Zealand, it will always be there.
"It is disappointing to see when people have a negative view of the co-op.
"The proof will be in the pudding, in showing those external commentators."
For Hurrell, taking on what is arguably New Zealand's most important corporate job was not a decision he took lightly.
"That was a joint decision that my wife and I took because it is an all-encompassing, 24/7 job."
As for more about Miles Hurrell - the man - he's not much interested in talking.
There isn't time.
