9 Aug 2013

Fonterra says no drop in orders post-contamination scandal

7:30 am on 9 August 2013

Fonterra says it has not seen a drop in orders since the contamination scandal broke but chief executive Theo Spierings says the issue may still hit its bottom line.

Speaking at a news conference in Auckland on Thursday, Mr Spierings admitted there was still a lot of work to be done to restore Fonterra's reputation, at home and abroad.

He says Fonterra's big customers have so far been focused on the recall, but he expected future supply agreements will be discussed at a later date.

Mr Spierings says there has been no discussion on future contracts or volumes, but those discussions definitely will take place.

He says the fact that shares in the Fonterra Shareholders Fund have recovered in price, and that there was only a modest dip in prices at the Global Dairy Trade auction earlier in the week, indicates that investors and customers have confidence in the cooperative.

Mr Spierings says he believes Fonterra's reputation in China will recover, but says more work needs to be done to win back consumers at home.

He says the dairy cooperative has acted ethically at all times, and a formal and thorough independent review will determine what lessons can be learned from the contamination scare.

Mr Spierings says Fonterra will disclose any financial impact to the market, if it is needed.

Meanwhile, Fonterra chairman John Wilson says independent directors and experts will conduct a full and thorough review, to determine what lessons can be learnt from the contamination issue and recall.

Units in the Fonterra Shareholders Fund, which anybody can own, rose 6 cents to $7.09 on Thursday while Fonterra shares, which only dairy farmers can own, gained 7 cents to $7.09.