Fonterra Plans to Divest Australian Assets

Fonterra Cooperative Group, a Kiwi dairy supplier, has revealed its plan to exit Australia as it considers divestment options for its global consumer business, Fonterra Oceania, and Fonterra Sri Lanka. This announcement follows the merge of Fonterra Brands New Zealand and Fonterra Australia into Fonterra Oceania just three months ago.

The decision to divest is part of Fonterra’s strategic shift towards focusing on being a B2B dairy nutrition provider. This change aims to generate additional value through its ingredients and food service channels.

Chairman Peter McBride stated, “We have conducted a strategic review that reaffirms our core business model, working with farmers to sustainably collect milk and efficiently produce products that are highly valued by customers, delivering strong returns to our stakeholders.”

Fonterra’s global consumer business includes leading brands such as Anchor, Fernleaf, Kāpiti, Mainland, Perfect Italiano, and Western Star. The Fonterra Oceania business comprises consumer, foodservice, and ingredients segments, while Fonterra Sri Lanka includes consumer and foodservice operations.

Following the divestment announcement, Fonterra mentioned that all businesses within the potential divestment scope demonstrated impressive performances in the first half of FY2024. They used 15% of the co-op’s total milk solids and contributed 19% of Fonterra’s operating earnings during this period.

CEO Miles Hurrell emphasized that divesting these assets will support the development of a simpler yet higher-performing organization. This move will also enable a new owner, possessing the necessary expertise and resources, to maximize the potential of the consumer and associated businesses.

Fonterra plans to appoint advisors for the divestment process in the next step. Given the size of the endeavor and the required shareholder support, the process is estimated to take 12 to 18 months.

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