NEW ZEALAND – Multinational dairy cooperative Fonterra divested its Chile dairy assets to Peru’s Gloria Foods in several transactions totaling around CLP 591.07 billion (US$641.4 million).

According to Fonterra’s CEO, Miles Hurrell, the divestment process formally began in April 2022, following the launch of Fonterra’s strategy to 2030, a “key pillar” of which is to focus on New Zealand milk by selling overseas businesses, last year.

The strategy included plans to return about US$1b to shareholders and unitholders by the end of its 2024 year.

The Co-op, owned by 10,000 New Zealand farmers, said it wants to focus on its domestic production, and the Soprole, its Chilean arm, “is a very good business but does not rely on New Zealand milk or expertise”.

Fonterra first bought a stake in Soprole in the 1980s and increased its share to 99.45% of the company in 2008, having paid US$201.9m for an additional 42.6% stake.

Soprole’s portfolio of dairy products includes liquid milk, desserts, yogurt, and cheese as well as fruit juice.

Meanwhile, Gloria Foods, which has operations in Bolivia, Puerto Rico, Argentina, Colombia, and Uruguay, produces dairy products, plant-based milk, jam, cake, canned fish, and soft drinks brands.

The two dairy businesses have “a long-standing commercial relationship in South America”, Fonterra said.

The world’s largest dairy exporter has backtracked on the sale of its Australian arm in September, saying business was “going well” in the country.

Last year, Fonterra received NZD88m (US$62.3m) in total asset sale proceeds from the sale of joint-venture farms in China, in which it owned a 51% stake, to Singapore-based AustAsia Investment Holdings.

The sell-off followed the cooperative’s announcement last October that it was selling its two wholly-owned China farming hubs in Shanxi and Hebei provinces to Inner Mongolia Youran Dairy in April for NZD552m.

Still, in 2021, The dairy group revealed it had further reduced its stake in China infant-formula joint venture Beingmate.

At one stage it had a 19% share in the venture but in March this was reduced to 2.82% with Fonterra saying it will have exited the JV entirely by the end of its financial year.

The cooperative reported an 11% growth in group revenue, to NZD23.4bn, for the 2022 financial year, and a 4% increase in normalized EBIT to NZD991m. Normalized earnings per share were up 1% to NZD0.35.

Fonterra said its annual results reflect strong progress towards its strategy to “focus on New Zealand milk, be a leader in sustainability and a leader in dairy innovation and science”.

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