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Commenting on developments, Dairy Farmers, Chief Executive Officer, Mr Rob Gordon, said the invest, fix or exit strategy, as announced on March 17 this year, is delivering tangible results.
“Since our announcement last month we have cut our corporate support resources by a total of 53 roles. This follows on from the 160 reduction in roles primarily from our supply chain in the first half of fiscal 05. Combined, the two sets of head count reductions will bring our overall head count down by [9]% since 30 June 04,” said Mr Gordon.
Mr Gordon said, “We’re also reducing the complexity of our business by consolidating our South East Queensland operations at Tingalpa and Caboolture into one strategic site at Booval. By restructuring our Sales, Finance, Human Resources, OH&S, Farm Services and Milk Trading teams, we’ll deliver further efficiencies.
[“The overall impact of these latest changes on our labour costs is around [$3-4.5m] which brings total labour savings we’ve extracted from the business in the past five months to more than [$10.5m].
“We are confident that the sale of non-core assets will deliver a return well above their current book values,” said Mr Gordon. “These funds will be redirected into improving our business mix as we continue to shift our focus to core, higher margin, more profitable branded businesses. In terms of our unbranded business, our future participation will be selective as we seek to strip out costs to establish a competitive operation and therefore ensure a positive contribution to our bottom line.
“By continuing to reduce complexity and simplifying the business, Dairy Farmers will be much better placed to compete in an increasingly competitive market as the dairy sector is impacted by rationalisation,” said Mr Gordon.
All divestments are being undertaken via Expressions of Interest or tender which are due to close between mid to end of May, with a target completion date of 30 June 2005.
The biggest of the property sales is a highly sought after riverside, 1.5 hectare site just minutes from the Brisbane CBD. It is the site of the Butter Producers Co-operative Federation Limited in which Dairy Farmers and Parmalat are the major shareholders.
The other properties being divested include Dairy Farmers’ Caboolture factory, Gootna milk depot in Queensland and former Dubbo factory in NSW.
The 14 Dairy Farmers Rural Stores include eight in NSW and six in Queensland, nine of which are owned and five leased. They employ a total of 74 employees, including both full time and casuals.
“The objective is to sell the stores as going concerns. We have already received some interest from potential buyers for a number of our stores and will now seek to progress these transactions,” said Mr Gordon.
Today’s announcement is the first of a number of major changes to be implemented by Dairy Farmers before the end of June this year as part of its major business restructure.
“We have a singled minded determination to turn this business around,” said Mr Gordon. ‘We’re moving at a swift rate, delivering significant results across the business, and remain on track to deliver double digit EBITDA growth during the second half of fiscal 05,” Mr Gordon said.
