By: Staff Writer
May 30, Colombo (LNW): Dairy giant Fonterra’s “full or partial divestment” of its consumer business in Sri Lanka received strong buyer interest in the move towards a “step-change in strategic direction” for the company to prioritize its dairy s production. Miles Hurrell, CEO of Fonterra disclosed.
Fonterra will now appoint advisors to assist with analyzing divestment options, for which it seeks shareholder support.
“We recognize a divestment of this scale would be significant for Fonterra. Throughout this process we will be considering how best to maximize overall returns to our farmer shareholders and unit holders,” says Hurrell.
“The choices we make when considering divestment options will be driven by a clear-eyed view of the best value-creating pathway for the co-op, both in terms of the potential proceeds from a sale and the ability for Fonterra to generate consistent economic returns over the long-term.”
Fonterra, which is selling its Sri Lanka business, says it has received “a high volume of interest” from potential buyers for its consumer and associated businesses.
“It’s still early days in this process, and we commit to providing farmer shareholders, unit holders, our people and the market updated on new developments as they occur,’ says Fonterra chief executive Miles Hurrell.
“We are also progressing work on our updated strategy and expect to share further detail over the coming months,” says Mr Hurrell.
Earlier this month, the co-op announced plans to divest, either fully or partially, its consumer business that includes iconic brands like Anchor, Mainland, Kapiti and Perfect Italiano.
The consumer and associated businesses that are being put on the block – which include Fonterra Oceania and Fonterra Sri Lanka – collectively utilised approximately 15% of the co-op’s total milk solids and represented approximately 19% of Fonterra’s group operating earnings in the first half of the 2024 financial year.
Hurrell provided an update on the divestment plan during its third quarter result announcement this morning.
“Following our announcement earlier this month of a step-change in our strategic direction, we have received a high volume of interest from parties looking to be involved in the potential divestment of our Consumer and associated businesses,” he says.
Meanwhile Fonterra announced profit after tax from continuing operations of $1 billion, up $20 million from last year or equivalent to 61c per share.
This result is driven by continued strong earnings across all three of the co-op’s product channels.Hurrell says the co-op’s Food service and Consumer channels had a strong third quarter with a lift in earnings compared to the same time last year.
