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A sequel to the short but controversial tenure of former a2 Milk chief executive Jayne Hrdlicka has been playing out in the Australian media over how much her former employer, Bain and Co, was paid for consulting services while she was in charge.
The stoush stems from an interview Hrdlicka did with the Sydney Morning Herald last weekend, in which the current head of Virgin Airlines Australia was reported to have said that of the $19 million spent on consultants during her time at a2 Milk, only a small proportion was on Bain fees.
But in a letter to the paper, a2 Milk said: "In truth, during her tenure more than $33m was spent on consultants, of which some 80 per cent (more than $26m) was spent on Bain."
Elsewhere in the article, Hrdlicka said she decided to leave her employment for personal family reasons.
A2, in its letter, said Hrdlicka had been asked by the board to leave and that she had agreed to do so.
"Personal reasons were raised by Ms Hrdlicka after the board had communicated that she had agreed to step down," a2 Milk said.
In a statement, Hrdlicka said she would continue to comply with "mutual legal obligations" and that she would say no more.
However, she pointed to the December 2019 announcement which covered the reasons for her departure.
"The reality however is that the next three to five years will continue to require the CEO being present in our core markets of China and the US and that combined with running a New Zealand company based in Australia required more travel than I had anticipated when I joined the company," she said in that NZX and ASX statement.
"The board and I agreed that this next phase is going to be too difficult to manage alongside my other commitments whilst also managing the health and wellness priorities of my family and me."
Hrdlicka was no stranger to controversy while at a2 Milk.
Late in 2018, Hrdlicka - who came to a2 Milk from cut-price airline Jetstar - drew flak after selling about 340,000 shares in the company - worth $4.3m - just a few months into her time there.
Hrdlicka, who is the current chair of Tennis Australia, was appointed chief executive of a2 Milk in 2018.
A spokesman for a2 Milk said the company had only ever sought to have the facts corrected.
Given the Sydney Morning Herald had now printed a correction to the Good Weekend story, no further action was contemplated at this stage, the spokesman said.
For the moment, it appears the parties have called a truce.
Former a2 chief executive Geoff Babidge filled the CEO role on an interim basis last year.
In January this year, David Bortolussi was appointed CEO.
The Covid-driven troubles that a2 Milk has endured in the unofficial "daigou" trade into China have been well documented.
But what about the more traditional "offline" channels which, in the olden days, used to be called "shops"?
Brokers Forsyth Barr recently visited 40 mother and baby stores in China, interviewing sales reps and store managers, analysing a2 Platinum's shelf presence, pricing, marketing and digging into foreign versus local brand preferences.
Travel restrictions meant the channel checks were undertaken by the broker's colleagues in Hong Kong.
"There is nothing to change our view that the opportunity for the a2 Milk Co is material in offline channels in China, where it currently under-indexes, and we see a2 Milk as well-placed to continue to grow.
"However there are increasing headwinds evident in our channel checks (slowing industry growth and growing competition from local brands) which means execution is important and suggests a continued lift in marketing and investment in-store will be required by a2 Milk," the broker said.
Trouble in the daigou channel has plagued a2 Milk's share price, and its earnings.
The stock closed at $9.10 yesterday, having dropped 42 per cent over the past 12 months.
Research by IBIS World has revealed "buy now pay later" companies are among the top four loss-making industries in Australia.
While the industry, which includes ASX-listed Afterpay, Zip Pay, Klarna, Humm Group and Kiwi firm Laybuy, has been one of the fastest-growing, it has yet to achieve profitability since its launch in 2011-12.
The industry's revenue is expected to grow by nearly 26 per cent in 2020-21 to A$817.1m but the average profit margin sits at -2.6 per cent.
Yin Yeoh, IBIS World senior industry analyst, said although the industry was growing strongly firms had made losses over the past five years and would likely continue to do so over the next year.
"While losses as a share of revenue are declining, the industry has yet to achieve profitability," Yeoh said.
According to the Reserve Bank of Australia, the number of credit cards in Australia declined by 6.6 per cent in 2019-20, as more consumers turned to buy now pay later (BNPL) providers rather than credit cards during the Covid-19 pandemic.
BNPL services, such as Afterpay, Zip Pay and CBA's BNPL partner, Klarna, have become increasingly integrated into the checkout processes of online retailers.
Online Shopping revenue is expected to grow by 6.4 per cent in 2020-21, to A$31.2 billion.
"While the industry continues to post losses, the scale of losses has shrunk significantly over the past two years. It is likely that the industry will achieve profitability for the first time before 2023-24," explained Yeoh.
The other three loss-making industries were international airlines, cotton ginning and wired telecommunication network operation.
Jarden's head of research, Arie Dekker, says Fonterra is moving in the right direction after undertaking a "reset" of the business in 2019.
The co-op reported a 17 per cent lift in operating earnings this week, together with a 5c interim dividend.
"It is 18 months since Fonterra provided a high-level view of a new strategic direction that was more principles-based than detail-oriented," Dekker said in a research note.
"It recognised Fonterra's limitations (asset-intensive business; access to capital), promising focus on core strengths and more transparency."
There has been progress, with $2 billion of divestments near complete, while earnings have stabilised, Dekker said.
Fonterra's aspiration is to return to 50c earnings per share in the full year 2024.
"Communication around strategy has remained high level, focused on divestments and debt reduction, while communications around the farmgate milk price and in-year earnings guidance has improved," he said.
"With about $8b of equity investment in Fonterra - arguably too much in our view, particularly in the absence of confidence in performance - we think more detail is required to support the investment case and make informed decisions around capital structure choices," Dekker said.
Fonterra's units - which give investors access to Fonterra's dividend flow - closed yesterday at $5.08, having gained 34.4 per cent over the past 12 months.
Miles Hurrell, Ian Proudfoot, Matt Black, Chris Russell, and Hamish McKay.