Fonterra launches investor roadshow for consumer unit sale

NEW ZEALAND -Fonterra  has raised its full-year earnings per share (EPS) outlook and begun a series of roadshow meetings with potential investors to market the disposal of its consumer-facing business. 

The company now anticipates earnings per share to reach between 55 and 75 New Zealand cents, an increase from its previous guidance of 40 to 60 cents. 

This update comes as Fonterra prepares to release its interim results on March 20, reflecting confidence in its financial performance.

According to a statement released on March 10, Fonterra CEO Miles Hurrell expressed optimism about the cooperative’s direction. 

“It is pleasing to see the Co-op delivering strong earnings performance,” Hurrell said, highlighting a forecast Farmgate Milk Price midpoint of NZ$10 (US$5.74) per kgMS, which he described as a significant benefit for farmer shareholders. 

He further noted that the improved EPS forecast demonstrates the strength of the company’s core ingredients business and the resilience of its consumer operations, both of which are supporting the divestment process.

A report by Fonterra also confirmed the start of roadshow meetings aimed at engaging potential investors for the sale of its global consumer and associated businesses. 

The disposal, first announced in May last year, is a strategic move to shift focus toward its dairy ingredients operations. 

The roadshows, taking place across New Zealand, Australia, and Asia, are being led by René Dedoncker, CEO-elect of the consumer business, and Paul Victor, its CFO-elect.

Post-transaction, this unit will operate as Mainland Group, encompassing well-known brands like Anchor butter and Mammoth flavored milk drinks.

The company is considering multiple options for the divestment, including a potential initial public offering (IPO) or a trade sale. 

Hurrell emphasized the importance of this phase, stating, “These meetings are an important step in the process of testing the merits and value of an IPO, which the Co-op is exploring as a divestment option alongside a trade sale.” 

However, Fonterra clarified that any final decision on the divestment requires approval from its farmer shareholders.

While the consumer business is set to be sold, Fonterra plans to retain its manufacturing facility in Saudi Arabia and its consumer operations in Greater China. 

This strategic realignment underscores the cooperative’s intent to streamline its portfolio and prioritize its ingredients division. 

Meanwhile, in unrelated dairy industry news, a Danish firm has recently acquired a majority stake in ice cream producer Hansens, signaling continued consolidation in the global dairy market. 

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