On 14 December 2018, Fonterra Shareholders' Fund (ASX: FSF) CEO announced the changes made in the management team. Mike Cronin will join the managing director who will be responsible for the Co-operative Affairs. Through Co-operative affairs, he will be responsible for bringing together the company’s operations and the farm source team.
The purpose of the changes in the management structure was to streamline to the process by introducing someone with broader experience and skills.
Mr. Cronin also states that both the teams of the company, i.e., the operations and the farm source teams had a discussion on sustainability, communications, on-farm practices and both have common objectives to work closely on a day to day basis.
FSF, since its inception, has given a negative performance. Its performance in 5 years was -15.87%. The last year's performance of the company was -24.91%.
In FY2018, FSF was not able to meet its earnings guidance in the second half. There were many reasons. Amongst them, the most important reasons were that Fonterra always faces challenges in forecasting. The other reason was that the prices of butter did not come done as per their expectation which impacted the sales volume and the profit margins. The farmer delayed in forecasting an increase in the Farmgate Milk price which also influenced the profit margin and lastly, the operating expenses also moved up.
As a result of the increased price of milk, FSF was unable to push another 400 million liters of milk into its Consumer and foodservice which led to the reduced margin the company faced challenges to bear the operating cost during the FY2018. Further, the company had to make investments in its research and development and its information technology to support its future growth and development.
From the statement of net asset attributable to the unitholder; there is a decrease seen in the net asset by $193 million in FY2018 as compared to FY2017. The company does not hold any cash and cash equivalent with itself.
After the announcement of FSF’s changes in the management team led the market price of the share to fall by 2.273% which is $0.100 less than the previous day’s closing price.
With the market open on 14 December 2018, the market price of the share was A$4.40 which remains constant regarding day’s highest price. The lowest price for the day was A$4.25 where around 106,632,487 traded on ASX today. The closing price of the share on 14 December 2018 was A$4.30 which is towards the 52 weeks low price, with the stock, reported a market capitalization of A$469.18 million.
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