Fonterra Announces Divestment Plans and Price Update
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- Fonterra confirms plans to divest its global Consumer and integrated businesses.
- The Co-op raises its milk price forecast for the 2024/25 season.
- Buyer interest highlights the value of Fonterra’s strong global business portfolio.
Fonterra Co-operative Group Ltd has announced its decision to proceed with divestment options for its global Consumer business, along with integrated businesses in Oceania and Sri Lanka. The update follows a detailed scoping phase involving advisors and internal assessments.
CEO Miles Hurrell stated, “Since our announcement in May 2024, we have been working with our team of advisors to assess potential divestment options, the assets and businesses in scope, and the best pathway to maximise value for our Co-op.”
Hurrell confirmed that divestment aligns with Fonterra’s revised strategy to prioritise its Ingredients and Foodservice divisions. “Our revised strategy will see us prioritise our Ingredients and Foodservice businesses, creating a more focused and higher performing Co-op,” he said.
Meaningful buyer interest in the businesses slated for divestment has emerged, validating their strength and growth potential. Hurrell also noted that both a trade sale and an IPO are viable pathways being considered. Advisors have been appointed to manage this process, and Fonterra plans to consult its farmer shareholders before making a final decision.
The Co-op is targeting significant capital returns for farmer shareholders and unit holders following the divestment.
In a separate announcement, Fonterra raised the midpoint of its 2024/25 season forecast Farmgate Milk Price to $9.50 per kgMS, an increase from the previous $9.00. The forecast range was also narrowed to $9.00–$10.00 per kgMS.
Hurrell attributed the improved outlook to strong demand for commodity products, particularly in regions like China, Africa, the Middle East, and Southeast Asia. He added, “We’ll closely monitor any factors that could have an impact on supply and demand.”
Fonterra remains focused on using its scale and flexibility to optimise its product mix and capitalise on high-return opportunities.