Worse Is Yet To Come?, page-1251

I had a very interesting conversation this weekend with a member of the senior management team at MG.

Interesting because he stated that the attitude from the new CEO (Aris) and CFO (Mallinson) is totally focused on balance sheet repair and debt reduction. Not Farmer Suppliers or increasing the base FMP to elevate any pain farmers are experiencing. They believe that at this stage of the year the price they are paying is 'fair'. Really!. They feel they have stripped as much excess cost as they can out of the business and continue to focus on re-sale value of unusable plant & equipment at the three sites due for closure. They have no interest in selling any of the sites as sale value would not cover asset value on the books (further hitting the balance sheet). The consensus is rival companies will not be picking up any production site bargains at MG's expense. They will hold the sites at asset value for as long as required. There is zero interest in the staff at the sites that will soon be unemployed with limited options for employment.

They have lost 48 suppliers in July (as at 16 July) but expected to lose 80-100 (the month is not over yet though).

Just as interesting is the CEO was surprised and somewhat deflated with the media criticism he received a little while ago when he said the FMP paid would now cover cost of production. His view is farmer suppliers are over sensitive, stuck on events of the past and lacked resilience! Beggars belief. He has chosen to make no public comments since.

Also insightful, they have lost another General Manager of Risk, second one in 2 years. That says to me they don't like what their hearing, and easier to shoot the messenger than fix the problem.

I never thought I would say this, but if you're still a farmer supplier and are in a position to move, why the hell haven't you? This business has lost focus on what really matters: the farmer.

On a positive note: they are expecting a small profit at year end.