Fonterra Cooperative Group has confirmed Judith Swales’ appointment in leading the dairy processor’s high-margin global consumer and food service business.
Swales has been running the unit since January, replacing Lukas Paravicini who left the world’s biggest dairy exporter last month. Today, Fonterra said Swales will be permanently appointed to continue the momentum she’s already started to build.
“Judith’s strengths as a leader lie in her ability to quickly understand what needs to be done and her action-orientation,” chief executive Miles Hurrell said in a statement. She’s very purposeful in the way she goes about things and I have every confidence in her delivering the kind of performance that people expect from us.”
Fonterra’s consumer and foodservice division generates the company’s biggest margin and is its key engine for earnings growth.
The unit reported shrinking margins and smaller sales volumes in the first quarter of the current financial year, as its Chinese business faced a delayed consumer product launch, increased border controls in Hong Kong, and lower foodservice sales of butter, cream cheese and UHT cream.
Fonterra downgraded its earnings guidance and suspended its interim dividend last week due as higher global dairy prices prompted a hike in the forecast farmgate payout to its supplier-shareholders, lifting the cost of raw materials for its high-value business.
That downgrade prompted Fitch Ratings to put Fonterra’s credit rating on notice, saying the company’s asset sale programme will be critical for it to get its earnings-to-debt ratios back to more manageable levels.
Hurrell has said the Fonterra’s underlying performance isn’t where it needs to be, with challenges in the Australian ingredients, and Asian foodservice units. A fundamental change in direction is needed to realise Fonterra’s potential, he said.
Swales has been with Fonterra since 2013 and is already a member of the senior leadership team. Over that time, she’s been in charge of the Oceania business, and more recently oversaw the group’s transformation and innovation function.