Fonterra’s $3.2b capital return to farmers set to boost rural incomes and NZ economy
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
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.”
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
New Zealand’s trade with the European Union has jumped $2 billion since a free trade deal entered into force in May last year.
The climate of uncertainty and market fragmentation that currently characterises the global economy suggests that many of the European agricultural machinery manufacturers will be looking for new markets.
Dignitaries from all walks of life – the governor general, politicians past and present, Maoridom- including the Maori Queen, church leaders, the primary sector and family and friends packed Our Lady of Kapiti’s Catholic church in Paraparaumu on Thursday October 23 to pay tribute to former prime Minister, Jim Bolger who died last week.
Agriculture and Forestry Minister, Todd McClay is encouraging farmers, growers, and foresters not to take unnecessary risks, asking that they heed weather warnings today.
With nearly two million underutilised dairy calves born annually and the beef price outlook strong, New Zealand’s opportunity to build a scalable dairy-beef system is now.
OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.
OPINION: Politicians and Wellington bureaucrats should take a leaf out of the book of Canterbury District Police Commander Superintendent Tony Hill.