increase font size
Fonterra’s out-going chief executive Theo Speirings was a big promoter of the co-op’s investment in Beingmate.
Fonterra says it has been “fully transparent’ about Beingmate’s performance and its impact on the co-op’s financial position.
Fonterra shareholders could end up losing over $1 billion on the co-op’s controversial investment in Chinese infant formula company Beingmate, says business commentator Rod Oram.
This includes announcing an impairment of $405m at the half year, as well as $28m to account for its share of Beingmate’s losses.
“As we’ve said previously, the performance of this investment is unacceptable,” a Fonterra spokesman told Rural News.
“Our priority is pushing for an urgent business transformation by working cooperatively with Beingmate’s founder and majority shareholder.
“There are a number of opportunities to reverse the business’ current performance, starting with unlocking the distribution network and meeting customers’ preferences for e-commerce.”
The first step of the transformation is the appointment of a new and independent chief executive officer, supported by a strong senior management team.
Fonterra denied that Sam Xie has returned to the company as chief executive of Beingmate Baby and Food Company in which Fonterra has a 18.8% stake.
Commenting on the strategic objectives of its tie-up with Beingmate, Fonterra says any global company wanting to have a long-term, sustainable business offshore “needs to approach their partnerships collaboratively and strategically”.
Fonterra says for its business in China that means sharing knowledge and experience to improve local food safety and quality standards, investing in the local dairy industry as it has with its China farms, and partnering with a Chinese company.
“The performance of the Beingmate investment has clearly been disappointing; however it has played a strategically important role in enabling us to operate in the China market, where we achieved $3.4 billion in sales revenue last year.”
Fonterra also refuted claims that it had been taken for a ride by Beingmate founder Sam Xie.
“Doing business with China has always come with unique challenges and Beingmate’s performance has been clearly disappointing.”
The co-op says its extensive due diligence before it invested in Beingmate drew on internal and external advisors’ expertise.
“The due diligence outlined a number of significant opportunities which continue today,” the spokesman says.
‘It’s important also to view our investment in Beingmate as part of a long-term, strategic plan to grow in the China market.”
In a follow-up to this old mutt’s piece two issues ago about Fonterra directors getting to grips with the co-op’s financial state and loudly sharing their dismay in the Koru club, another of the Hound’s spies has passed on more news in the ‘Fonterra director watch’ category.
Fonterra says there’s an urgent need to improve return on capital invested in the co-op by farmers and unit holders.
Fonterra has taken a $126 million hit over the sale of its stake in Venezuelan consumer joint venture, Corporacion Inlaca.
Fonterra is pulling out of a European joint venture as part of its portfolio review following last year’s disastrous financial results.
Fonterra says it has returned to profitability with a net profit of $80m for the first half of the 2019 financial year.
Chinese dairy giant Yili will pay $588 million for dairy co-op Westland Milk, it was announced overnight.
The proposed sale of Westland Milk to Chinese company Yili is causing alarm among social media users.
Landcorp is paying members of its contentious environmental reference group (ERG) $1500 a day each – far more than other…
An Irish dairy researcher says despite admiring New Zealand’s dairy industry he has concerns about it.
OPINION: The PM's unrealistic claim of a free trade agreement with the EU before the end of the year is proving…
More questions are being asked about the Government’s contentious $10 million loan to Westland.
Cows and bulls searching for ‘moo love’ now have a mobile app to help their breeders.
