Fonterra sells Australian yoghurt, dessert business after $108 mln writedown

Wednesday 16th December 2015

Fonterra Cooperative Group, the world's biggest dairy exporter, has sold its Australian yoghurt and dairy dessert business to Parmalat Australia for an undisclosed sum, having written it down by $108 million in the 2015 financial year.

The transaction is "not material in itself" and was disclosed as part of a broader shift in Fonterra's Australian business, which is expected to return to profit next year, the Auckland-based cooperative said in a statement. The deal is subject to regulatory and other approvals, and will likely be completed in the first half of next year.

"Our Australian operations have particular ingredient strengths in cheese, whey and nutritionals, complemented by our strong consumer and food-service businesses," said chief executive Theo Spierings. "As a key part of our multi-hub strategy, we are matching these strengths with the opportunities across our 100 markets."

Australia has been a problematic market for Fonterra for several years due to fierce competition for milk supply, too many brands and an over-capacity in production. That prompted the company to embark on a plan to turn around the performance, which has included the sale of Fonterra's stake in Bega Cheese, the striking of a deal with Bellamy's Australia to manufacture infant formula, and the merger of New Zealand's consumer brands with the Australian segment under the purview of Oceania managing director Judith Swales.

Units of the Fonterra Shareholders' Fund were unchanged at $5.77, and have decreased 4 percent this year.

BusinessDesk.co.nz

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