Fonterra estimates that axing 300 corporate jobs will mean annual savings of $65 million, on top of the $60 million in cost savings it has already committed to deliver this year.
That's before restructuring costs, but chief executive Theo Spierings said he can't quantify those restructuring costs until after consultation with staff, a process which will take until the end of May.
Mr Spierings said the cuts are not being made to save money, but are a reallocation of resources which would allow its overseas branches to be more autonomous and less controlled by support staff in New Zealand.
Investors welcomed the news and units in the Fonterra Shareholders Fund jumped 25 cents, or more than 3.2%, to $8.06 on Wednesday.
Mint Asset Management fund manager Shane Solly said the job cuts were not unexpected and further cost-cutting is likely.
He said when the company first came to listing on the stock market there was a focus on the relatively high head office costs that Fonterra has had, and this is addressing some of those concerns.
Mr Solly said the move is definitely a positive one from an investors perspective.
He said there's likely to be more cost-cutting in the support side of the business, but then reinvestment in other parts of the business over time.
Craigs Investment Partners analyst Arie Dekker says investors also welcomed Fonterra's plans to reinvest the savings.
He said the company has said it will be looking to reinvest the money through these savings in growth areas such as the roll-out of their value-added services in Asia.