Fonterra's new chief executive is Miles Hurrell, the Kiwi who has been keeping the seat warm for six months and helping steer New Zealand's largest company out of turbulent financial waters.

The big dairy cooperative has announced Hurrell's permanent appoint on a base salary of $1.95 million, with additional short and long term incentive payments on the achievement of targets agreed with the board.

Fonterra's previous chief executive Theo Spierings took home $8 million in the 2017 financial year. Spierings exited Fonterra mid-last year.

Chairman John Monaghan, also relatively new to his job, after succeeding former chairman, the late John Wilson, soon after Spierings' exit, said the board had been impressed by Hurrell's leadership and commercial skills "as it continued to breathe fresh air into the cooperative".

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"Miles has been performing well under difficult circumstances. Our performance is not something that will be fixed overnight," he said.

Fonterra last year posted a historic net annual loss of $196m.

Fonterra's gearing ratio bumped up by 11 per cent to $6.2 billion, driving the gearing ratio to 48.4 per cent to beyond the company's own comfort levels of 40 to 45 per cent.

Chief financial officer Marc Rivers said most of the increase in gearing ratio came from the previously advised $232 million compensation payment Danone and the $439 million-write-down in Fonterra's 18.8 per cent in holding in China's Beingmate.

Fonterra last week increased its 2018-2019 dairy season forecast farmgate milk price range to $6.30-$6.60kg milksolids, up from $6.00-$6.30, and revised its forecast earnings down to 15-25 cents per share.

Fonterra also announced it would not be paying an interim dividend.

Fitch Ratings yesterday put Fonterra on notice over its credit rating, saying its asset sale programme will be critical in getting debt under control.

The international ratings agency downgraded the outlook on Fonterra's 'A' long-term issuer default rating to 'negative', from a previous 'stable' outlook. Fitch said last week's earnings downgrade indicated that Fonterra is facing structural issues that it needs to deal with if it wants to keep the defensive traits protecting its business profile.

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Monaghan last week said a decision on any full-year dividend would only be made at the end of the financial year and would depend on the company's full-year earnings and balance sheet position.

He said while the milk price was strong, the co-op's earnings performance was not satisfactory and it needed to deliver to its farmer-owners and listed unit holders a respectable return on their investment.

The board was making solid progress with a full review of its business strategy which includes a review of the dividend policy, he said.

The board has promised to reduce debt by $800 million this year.

Hurrell joined Fonterra in 2000. His 19 years experience in the dairy industry has included jobs in Europe, the United States, Middle East, Africa and Russia. Before being appointed interim chief executive last year he was the chief operating officer of Farm Source, the Fonterra business unit that deals directly with its farmer-owners.

Monaghan said Hurrell had demonstrated the wisdom, skills, experience and "frankly the backbone needed to lead".

"His permanent appointment will bring some much-needed stability to the co-op and our people during a critical period of change."

Fonterra's business review, announced with the dual changes in leadership, includes a re-evaluation of its investments, major assets and partners, as well as a full revisit of its strategy.

Fonterra's share price rose 3c to $4.28 on the news of Hurrell's permanent appointment.

Reaction from Fonterra's farmer-owners ranged from strong support for the decision to disappointment.

Craigs Investment Partners' Mark Lister said Hurrell hadn't been in the chief executive's job long enough to judge his performance.

"We haven't seen any progress from Fonterra, but you can't blame Mr Hurrell for that. The jury is still out and it's far too early to judge his performance.

"I'm giving him the benefit of the doubt. There is definitely some value in appointing someone already there, someone who has come through the ranks from a more grassroots basis.

"But there will also be some who will say this is a company that's really lost its way and it really needs to do something dramatic to shake things up.

"However it would be unfair to have him as a caretaker for six months and then bring in some high flyer.

"The issues Fonterra has are bigger than just who is in the CEO's chair," Lister said.

Former Fonterra deputy chairman and dairy farmer Greg Gent was pleased with Hurrell's permanent appointment because it "buys certainty" and provided stability for the company.

But another farmer-shareholder said he was disappointed - "in the process more than the result".

He would've preferred Hurrell to have been left in the interim job for a year or two while Fonterra "settled down". A global search could have then been held for a permanent chief executive, which could have considered Hurrell if he wanted to apply.

"It's a backdoor entry. It's too easy to say let's keep chugging along."

State-owned enterprise Pamu, formerly Landcorp, is one of Fonterra's biggest milk suppliers.

Chief executive Steve Carden said he was pleased with the permanent appointment of Hurrell, who the organisation had worked with for many years.

"We expect that positive relationship to continue and we will fully support him."