Waters tagged as Fonterra favourite

Ralph Waters leaves Fletcher Building to spend more time with his family. Picture / Greg Bowker

Outgoing Fletcher Building chief executive Ralph Waters is likely to be appointed to the board of Fonterra, New Zealand's biggest company - if he accepts the job.

The gruff Australian, who has transformed Fletcher Building into a sharemarket champion, is at the top of the dairy co-operative's shortlist for a replacement director, the Business Herald has learned.

Waters, 57, was ill at home when contacted for comment. He denied he had been appointed, and would not comment further.

Waters exits Fletcher Building at the end of next month to spend more time with his family.

Business Herald inquiries among leaders of the dairy company, owned by 11,300 dairy farmers, confirm Fonterra hopes to announce Waters as a director soon. Fonterra chairman Henry van der Heyden is in Europe and did not respond to requests for comment.

Waters would replace one of two independent Australian directors who left the Fonterra board within weeks of each other last year.

Australian mining leader Ian Johnson resigned suddenly in November, citing personal reasons, after one year on the board.

David Hoare, chairman of Principal Global Investors Australia and a former chairman of Telstra Corporation and Bankers Trust Australia resigned in November. He joined the board in 2003, at which time he chaired the University of Sydney's finance and remuneration committees and was chairman of the Australian Graduate School of Management.

Hoare and Johnson served on Fonterra's appointments, remuneration and development committee.

Fonterra recently announced the appointment of one replacement director, Australian John Ballard, an experienced senior executive with Coca-Cola Amatil and Southcorp, with a grounding in marketing consumer goods and distribution.

The low-key departures of Hoare and Johnson raise doubts that Waters would accept a director job offer.

Fonterra is a farmer-owned, farmer-governed export co-operative with revenues of $12 billion last year.

It is the world's sixth biggest dairy company and with merger teething pains and some disappointing offshore value-added business investments hopefully behind it, is firmly focused on offshore brand growth. It has recently invested in China through a joint venture.

Fonterra aims to be Australia's biggest dairy company and has big plans for growth in Central America.

Fonterra's adventurous spirit could appeal to Waters, who spent more than $1.6 billion on acquisitions on his five-year watch at Fletcher Building to produce an eightfold increase in earnings.

He transformed the underperforming wash up of the Fletcher Challenge empire break up by investing in his homeland Australia, shaving costs and introducing efficiencies.

During his time Fletcher Building's shares quadrupled, taking its market share to $4.5 billion and elevating it to the third largest company on the sharemarket.

Waters will stay with Fletcher Building as a board member. He is also a director of Fisher and Paykel Appliances.

A top-level Fonterra source said the company was on the hunt for a "transtasman" director and Waters was in its sights. Another confirmed the Business Herald's suggestion that Waters was the favourite.

Fonterra, formed in 2001 from a dairy industry merger that absorbed the single-desk exporter the Dairy Board and heavyweight manufacturers Dairy Group and Kiwi Co-operative Dairy, has 12 directors. Nine are farmers, elected by farmers.

There are seats for four independent, non-farmer directors at the board table.