Tuesday, 13 November 2018 08:55

Three assets up for review at Fonterra

Written by  Sudesh Kissun
New Fonterra director Peter McBride (right) with shareholders Stuart Bay (left) and Dean Fountain. New Fonterra director Peter McBride (right) with shareholders Stuart Bay (left) and Dean Fountain.

Fonterra has identified three assets during the first phase of a board-led portfolio review, says chairman John Monaghan.

They include the loss-making investment in Chinese baby food maker Beingmate and two value-added investments.

Monaghan says at this stage nothing is off the table; divestment in full or part.

He told the Fonterra AGM in Lichfield last week that a decision and completion of transaction on each investment will be completed this financial year.

On Beingmate, Monaghan says Fonterra staff in China took over the management of the Anmum e-commerce channel from Beingmate in May this year. In that six months Anmum sales grew 43% over the same period last year.

The co-op has appointed Goldman Sachs to review its shareholding in Beingmate and changes to the deal involving its Darnum plant in Victoria, Australia.

Monaghan says the second phase of the review involves the co-op’s full portfolio.

“We are taking stock of our co-op, assessing our investments, major assets and partnerships against our strategy and target return on capital.”

Monaghan insisted Fonterra was not holding a fire-sale.

“We are taking a clinical look across our business. There are no sacred cows and there’s no room for being sentimental.”

The third stage of the review will include exiting certain investments no longer core to the co-op’s strategy, reallocating capital to new or existing ventures or reducing debt.

Monaghan says the board has some tough decisions to make.

He assured shareholders that the board would be transparent to them.

“We’ll keep you up to date with our progress where it is commercially viable and at all times show respect for your capital that we have invested on your behalf.”

Reduce debt

Fonterra is working to reduce its financial year-end debt by at least $800m.

Chief executive Miles Hurrell says current expenditure is set at $650m, a reduction of $211m.

“We are reviewing all discretionary initiatives in the pipeline and challenging all spending to help us achieve this.”

More like this

Fonterra posts solid results

Fonterra has delivered a solid half-year result, thanks to higher margins and sales volumes across the co-op's diversified product and category mix.

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.

» Latest Print Issues Online

Milking It

Papal visit

OPINION: European farmers are going to extreme lengths to have their message heard.

Thai egg tarts

OPINION: The hustle and bustle of one of Bangkok's most popular fast food outlets may feel a world away from…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter