Fonterra cuts earnings forecast after order to pay $183m to French food giant over botulism scare

Dairy giant Fonterra has cut its earnings forecast in response to being ordered to pay French food giant Danone $183 million over the 2013 botulism scare.

Fonterra says the decision by the arbitration tribunal in Singapore has no impact on the forecast Farmgate Milk Price.

The company says it has assessed the potential financial implications of the decision and made a prudent decision to revise its forecast earnings per share range for the 2017/18 financial year to 35 to 45 cents, down from 45 to 55 cents.

The botulism scare stemmed from Fonterra quarantining several batches of whey protein concentrate after there were concerns they could have been contaminated with clostridium bacteria.

Danone, then a buyer of Fonterra products, began a large-scale recall which they said cost about $610m, and ceased doing business with Fonterra.

It was later confirmed there had been no food safety risk to the public. 

Fonterra is in a strong financial position and is able to meet the recall costs - Fonterra CEO Theo Spierings

The French company had sought damages from Fonterra of up to $1.09 billion.

Fonterra's CEO, Theo Spierings, said the company is "disappointed that the arbitration tribunal did not fully recognise the terms of our supply agreement with Danone, including the agreed limitations of liability, which was the basis on which we had agreed to do business".

"The decision to invoke a precautionary recall was based on technical information obtained from a third party, which later turned out to be incorrect." he said in a statement.

"While there was never any risk to the public, we have learned from this experience and as a result have made improvements to our escalation, product traceability and recall processes, and incident management systems," Mr Spierings said. 

"Fonterra is in a strong financial position and is able to meet the recall costs," he added. 

Danone said in a statement it welcome the Singapore arbitration decision, saying it "underscores the merit of its legal actions against Fonterra".

"Danone believes that food companies and their suppliers can only work together through a solid relationship based on trust, transparency and accountability," the statement read.

Fonterra today requested a temporary trading halt ahead of the tribunal decision.

Botulism is a serious and potentially fatal bacterial infection caused by toxins produced by clostridium.

Duncan Coull, chairman of the Fonterra Shareholders' Council, said the arbitration decision has made this a tough day for the co-op and its farmer owners who will ultimately bear the cost, a fact he says is not lost on the Fonterra business.

"Our Co-op has made significant strides since the 2013 incident in terms of strengthening its operational processes, culture, and governance - as per the independent review process recommendations - and embedding them into our Co-op's functions and framework," he said.

Mr Coull said the council was also confident the co-op acted with integrity when it issued the precautionary recall.

CEO Theo Spierings says Fonterra can afford it, and it's unlikely it can challenge the decision over the Botulism scare. Source: 1 NEWS



The 'Swim Reaper' is lurking - Campaign using dark humour launched to help reverse high incidence of young men drowning during Kiwi summer

Today marks the first day of summer and with it comes an important message to swimmers – don't make bad decisions in or near the water or the "Swim Reaper" will be waiting for you.

In the summer of 2015, 113 people drowned, with one in three of those being young men.

Water Safety New Zealand now has a dark new advocate that is aimed at bringing those numbers down.

The Swim Reaper now has a presence on Instagram and will be making guest appearances at beaches, rivers and poolside.

Water Safety New Zealand chief executive Jonty Mills said using a bit of dark humour gets it through with a serious undertone message that the swim reaper is a potential consequence of bad decisions around water.

"It's a dark way to shed light on one of our most dangerous summer activities."

Young men are the big problem for officials, only 14 per cent of the population is made up of 15-30 year old but they are behind one out of every three drownings.

Randall Freeman said he has had a brush with the swim reaper.

"In that moment I did kind of feel like death was coming for me."

He said he "heard a few sirens but weren't quite sure what it was".

"I should have known it was the damn sirens. From there the rocks that we were on started to disappear with the water rising and my friends got swept down.

"The rapids were just getting to powerful that it pulled me under," he said.

Randall said younger people can kind of feel "invincible and like nothing can happen to us".

"But the reality is nature is pretty powerful and when we're in places where we don't belong, bad things are going to happen."

Mr Mills said the general advice is "people need to be aware of the conditions,"

"Know their own limits and make wise decisions around water, particularly when alcohol is a factor."

Young male New Zealanders are overrepresented in drowning statistics. Source: 1 NEWS

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National outbreak of whooping cough declared by Ministry of Health with babies under one-year-old the most vulnerable

A national outbreak of whooping cough has been declared by the Ministry of Heath, with 1,315 new cases reported since the beginning of 2017.

"Babies under one-year-old are most vulnerable to the disease and often catch it from older siblings, their parents or family members and friends," Ministry of Health Director of Public Health Dr Caroline McElnay said in a statement today.

"The best way to protect babies is for pregnant women to get their free immunisation against whooping cough between 28 and 38 weeks of pregnancy, and take their baby for their free immunisations when they’re six weeks, three months and five months old."

The Ministry of Health is advising siblings of new-borns should also be up-to-date with their immunisations. Older children receive free boosters at four and 11 years of age. 

"On time immunisation is vitally important," says Dr McElnay.

"If immunisation is delayed, babies are vulnerable for longer." 

The most recent national outbreak in New Zealand spanned from August 2011 to December 2013, with about 11,000 cases notified.

Three youngsters died during this last outbreak and hundreds needed hospital treatment.

The Ministry of Health said outbreaks of the disease occur every three to five years.

The main strategy for dealing with whooping cough in New Zealand is vaccination aimed at preventing disease in babies.

If pregnant women are vaccinated, they will pass that immunity on to their babies, protecting them until they are able to be immunised at six weeks of age.

The Ministry has asked midwives and general practices to work together to ensure that pregnant women are referred to general practices for immunisation.

The Ministry of Health has warned people to be extra vigilant in gathering for Christmas and New Year celebrations, to protect young babies from whooping cough.

The disease is less serious in adults, but is harder to prevent for them as immunity to it wears off over time.

The vital items are handed through midwives and DHBs.
Source: 1 NEWS