a2 Milk Company CEO steps down abruptly; shares slide

[BENGALURU] New Zealand's a2 Milk Company chief executive Jayne Hrdlicka unexpectedly stepped down on Monday from the role she took on in July 2018, sending the dairy company's shares about 8 per cent lower in their biggest intraday percentage loss in more than three months.

The resignation comes at a time when the New Zealand dairy industry is undergoing a tumultuous phase with industry giant Fonterra facing trouble with the execution of its global strategy.

"It is a bit of surprise to see someone step down after such a short tenure. I do wonder if there have been questions about her commitment to the company after the recent selling of shares," said Jeremy Sullivan, investment adviser at Christchurch-based Hamilton Hindin Greene.

Last month, the dairy firm disclosed in a stock exchange filing that Ms Hrdlicka had sold 61 per cent of the rights issued to her in June and August this year to meet expected tax obligations.

Commenting on her resignation decision, Ms Hrdlicka, who is also on the board of Australian retailer Woolworths Group, said the job was demanding more than anticipated travel requirements and it was becoming increasingly difficult for her to balance her work and family commitments.

Ms Hrdlicka was CEO of the Qantas Airways unit, Jetstar Group, for five years before she joined a2 Milk last year.

"Arguably, she would have had some other issues on why she sold (the shares) and the travel would have obviously got to her with a young family around," added Sullivan.

The Auckland-based dairy company said that former CEO Geoffrey Babidge had accepted the role of interim CEO while the board searched for a replacement.

a2 Milk Co said separately it would start searching for a full-time CEO immediately and hoped to make an appointment before the end of 2020.

Hamilton Hindin Greene's Sullivan said that industry veteran Babidge "not a bad pair of hands to pass the company to."

The dairy company also said that non-executive director Jesse Wu would assume a direct oversight role of the a2 China business in the interim.

The company also reaffirmed its outlook stated last month where it raised its operating profit margin forecast on the back of higher marketing spending.

a2 Milk's shares fell as much as about 8 per cent to NZ$14 in early trade.

Shares have risen more than 36 per cent this year but have recorded monthly falls in three of the last four months.

REUTERS