This article first appeared in our sister publication, Dairy Farmer.
When it comes to challenges, they don’t come much bigger than turning multimillion-dollar loss-making concern into a profitable business, but that’s what Westland Milk Products CEO Richard Wyeth and his team have achieved in a little over two years.
In 2021 Westland, now owned by Chinese company Yili, lost $80 million. Just a year later the company reported a profit of $40m, an improvement of $120m.
“The result that we got last year will certainly be the biggest turnaround I’ll ever achieve in my career so that’s pretty rewarding,” Wyeth says.
While favourable market conditions certainly played a part in Westland’s return to profit, it was equally down to the strategy Wyeth and his leadership team developed, called Zero-2-100.
“The strategy was executed very well and we got the perfect market conditions for what we were doing.
“My team came together exceptionally well, we had a good plan and we had the capital from Yili to deliver it well. You’ve got to have a good plan, capital and good people and then it was all about execution, all about making it happen.”
Wyeth’s been making things happen throughout his career, with key roles in the establishment of both Open Country Dairy and Miraka as notable career highlights. He grew up on a Wairarapa sheep and beef farm but with farming enduring the Rogernomics era at the time, he was encouraged to find another career and headed to Canterbury University to study law.
“I was never going to be a lawyer — I did two years but I used to sit there wondering, ‘What am I doing here?’ and I ended up doing a BCom and a BA in commerce. There was a lesson in that, find something you love and do that, don’t try and do something you don’t enjoy.”
As a student Wyeth was a keen social rugby player and captain of his team and ended up running a 400-player competition in Christchurch at the same time as completing a postgraduate diploma in sport management.
“I’ve always like organising things and I guess being a chief executive is just organising things at the end of the day.”
He then had “a multitude” of jobs, starting in the graduate management of what is now Bunnings and then, aged 24, he was the transport manager at the trucking company of his father’s cousin Kevin Lochore, former All Blacks legend Brian’s brother.
“We had 20 trucks and 40 drivers. It was all about learning how to manage people.”
He took a sales role at DB Breweries, followed by a stint at Coca-Cola.
“I always knew I wanted to run something, I didn’t know what it was, but it was all about picking up skills along the way.
“Bunnings taught me about end-to-end business, it taught me about inwards and outwards goods, and Lochore Contractors was based around managing staff and logistics. At DB Breweries I learnt to sell and Coca-Cola liked having young managers so I got more people experience as well as negotiating key contracts.”
He took a job with a genetics company to round out his experience.
“I wanted to learn about running a P&L, to really understand how to run a full business because when you’re in sales and those other things, you’re not really running a business.”
Early in his career Wyeth changed jobs often and he recalls being warned by older colleagues that so many changes would not look good on his CV, but he didn’t see it that way at all.
“I think I only applied for one or two of those roles along the way, I was asked, so I was pretty lucky in that sense. I was picking up skills, whether it was running people, negotiating contracts, learning how to sell, running a full P&L, all of those things, so that when opportunities came, I had the skillset to apply.”
In 2007 Wyeth joined Open Country Cheese, which had been established the previous year.
“It was absolutely the wild west, I mean some of the pictures I’ve got in my mind of what we did back in the day, you’d be horrified,” he laughs.
“But if you look at what Open Country Cheese was then to what Open Country Dairy is today, it’s just an amazing success story. I can’t claim any credit for that, the Talleys own that business and they’ve taken it from strength to strength.
“I learnt a lot around managing projects, around building factories and setting up processes and systems.”
One lesson was the importance of having a sales policy, something that was hammered home to Wyeth when he realised one of the company’s top salesmen had actually sold more cheese than Open Country could then produce.
“The market was going up and we’d already over-sold and we couldn’t even fulfil the orders and basically we were losing money incredibly quickly.
“I had to go out and say, ‘Look we’ve got this wrong and we need to trim all your orders back by a percentage’, and there were really challenging conversations,” he recalls, adding that he still has relationships with most of the people he had those conversations with back in 2008.
Wyeth became global sales manager, over three years seeing sales grow from 20,000t to 120,000t of cheese and whole milk powder a year.
“The thing about dairy in New Zealand and what I love about it is the scale, the international side. When I worked for Coca-Cola and DB in New Zealand, they’re big iconic brands in New Zealand but they’re still New Zealand, whereas when you get into dairy you’re selling to 40 different countries.”
In 2011 Wyeth was offered the chief executive role at Miraka, a Māori incorporation-owned start-up dairy company based in Taupō that planned to use geothermal energy to run the new plant.
“That was starting with a paddock. It was an amazing project. I think I was 35 and it was like, ‘Right, let’s build this thing’. We built a whole milk powder dryer and the beauty of it was we used geothermal energy so we had the lowest carbon footprint of any dairy processor in New Zealand.”
“We were profitable basically from the start. I think we broke even in year one and then we were profitable from there on.”
Wyeth loved his job at Miraka, overseeing it from start-up to a multimillion-dollar export business and with his two children George and Sophie at school in Hawke’s Bay, he and wife Sarah had no plans to leave Taupō. But then he received a call from a recruitment firm who were looking for a new chief executive at Westland.
“I understood Yili had purchased the business in 2019 so I was very aware of what had gone on and I knew the business had a lot of debt previously and was in a pretty challenging position. But when they approached me and talked about it I thought, ‘I’ve always been up for a challenge so why not?’
“I’ve always liked Westland, the people especially. It’s quite similar to the Wairarapa where I grew up, in terms of that small rural feeling and good, down-to-earth characters.”
But the dairy company he’d been appointed to run was in a very poor situation.
“I didn’t do my due diligence as well as I should,” Wyeth admits.
“I knew they were losing money and I thought that was about $40m a year but when I came in, they’d lost $70m in 2020 and the forecast for 2021 was to lose $90m. We managed to peg that back to $80m but the thing about that is it makes you make some very quick and clear decisions.”
First step was to cease infant formula production.
“They’d invested a lot of money but it didn’t fly so I said, ‘We’re getting back to basics, we’re not doing that.’”
An extension to the butter plant in Hokitika had already been signed off and it was decided to concentrate on selling butter and skim milk powder at the same time as getting out of the infant formula business. A 49-year-old dryer was decommissioned and with that coal consumption was reduced by 20%.
Another win was improving yields by 1%, which basically meant reducing the amount of product that went down the drain.
“One per cent of 60 million kg of solids at $10 a solid is a lot of money.”
The strategy behind the changes is called Zero-2-100, which translates as zero cost to quality and zero harm to Westland’s people, $2 per milk solid value improvement and $100m improvement in profit.
With his management team, Wyeth sat down and worked out how to improve the business by that $100m. Concentrating on butter and protein production, improving yields, reducing coal consumption and shutting down the infant formula plant were among the changes, along with putting both a foreign exchange and a sales policy in place.
“We didn’t have a foreign exchange policy and we weren’t selling at the right time.”
The foreign exchange changes resulted in $10m of extra profit and while a similar result hasn’t yet been achieved for sales, Wyeth is confident it will be in 2023.
“We’ve delivered a great result for 2022, we now need to continue to drive that and be profitable in 2023. We’re on track to deliver another profit. It is early days but we’re certainly in a good position.”
Richard and Sarah live in Christchurch, where most of Westland’s management team is based. Their daughter Sophie is still at school in Hawke’s Bay and son George has followed his dad to Canterbury University, though he’s studying engineering, not commerce.
Most weeks Wyeth gets over to the West Coast where the business that is so important to the regional economy is based.
“From what I understand we’re 60% of GDP on the West Coast – we put in about $550m of milk payments. There’s tourism, there’s still a bit of mining and there’s dairy farming, so absolutely we’re important for the West Coast and we don’t take that role lightly either.”
While the turnaround at Westland has been spectacular, Wyeth knows there’s more to be done and he’s itching to get the job done.
“I think it’s been exciting for the whole business to be on the journey we’ve been on. I don’t think we’re as good as we can be right down to the front line so there’s still more to do. I do get bored easily but I’m certainly not bored at the moment.”
