Fonterra has announced plans to divest its joint venture farms in China and its remaining stake in infant formula manufacturer Beingmate, in a move to prioritise its home market.
The dairy cooperative owns a farming hub in China’s Shandong province along with its joint venture partner, Abbott Laboratories.
The decision comes after Fonterra agreed to offload its own farms in the country for approximately $369 million and is similarly in line with the company’s strategy to focus on New Zealand milk. The divesture of its farms is expected to be finalised this financial year, while the sale of the JV farms is to be completed this calendar year.
In addition, Fonterra has revealed its plans to fully exit its Beingmate investment before the current financial year ends. The dairy company first began selling its stake in the Chinese manufacturer in 2019. On 31 January 2021, Fonterra’s shareholding stood at 3.94%, but the firm says it has now been reduced to 2.82%.
Fonterra made the announcements during its ‘positive’ first half-year results, with a total group normalised EBIT of $684 million, up by 17%.
Nevertheless, Fonterra CEO Miles Hurrell says Greater China continues to be one of its most important strategic markets.
“The team has delivered a 38% increase in normalised EBIT to $339 million, reflecting the strength of our Foodservice business in this region, improvements in our Consumer business and China’s strong economic recovery following the initial impact of Covid-19,” said Hurrell.
“We remain committed to growing the value of our Greater China business, which we’ll do by bringing the goodness of New Zealand milk to Chinese customers in innovative ways and partnering with local Chinese companies to do so.”
© FoodBev Media Ltd 2024
