The New Zealand-owned dairy company behind brands like Western Star butter and Perfect Italiano cheese is looking at options for Australian ownership.

Fonterra Australia says it is investigating several options, including listing on the stock exchange or inviting another major investor to buy into the business.

The business is currently owned by New Zealand dairy cooperative Fonterra, which is ranked by Rabobank as the sixth-largest dairy company in the world.

“The (NZ) co-op believes in Australia, and we’re clearly on strategy, however it does not need to retain 100 per cent ownership,” said managing director of Fonterra Australia René Dedoncker

“We are now embarking on a review of options, and that does include an IPO (initial public offering) where we potentially would list on the Australian Stock Exchange, where Fonterra New Zealand would retain a significant stake but importantly, we would be bringing the company closer to home in Australia.”

Regaining trust after the dairy crisis

The move toward Australian ownership would be seen as a final step by the company to regain trust with Australian dairy after the events of the dairy crisis in 2016.

At that time, along with Australian cooperative Murray Goulburn, Fonterra dramatically and retrospectively cut the milk price it was paying its dairy farmer suppliers.

Fonterra's Stanhope dairy factory

Fonterra’s Stanhope dairy factory.(

Supplied: Fonterra

)

The company said it needed to become profitable and return money to the New Zealand business.

Murray Goulburn, as a business, failed and was sold to Canadian dairy business Saputo. Fonterra has continued to operate.

“Over the last five years, we have consistently taken one small step at a time, making promises we can keep and rebuilding confidence with our farmer base,” Mr Dedoncker said. 

Imports will still come from New Zealand

Fonterra Australia managing director René Dedoncker

Fonterra Australia managing director René Dedoncker says the cooperative is considering an initial public offering. (

Supplied: Fonterra

)

Australia is still an important market for Fonterra in New Zealand.

Not only does it own a company in Australia, but Fonterra also exports large volumes of butter and cheese to Australia from New Zealand each year under the Mainland brand.

For that reason, maintaining a significant ownership stake in Fonterra Australia is seen as key for the business.

“We will be able to play a full role when we present ourselves on supermarket shelves. We will be able to leverage each other,” said Mr Dedoncker, who has not revealed if a significant stake by Fonterra NZ is a majority stake.

New Fonterra Australia

The company says it will be working through available options pre-Christmas, with a view to announcing its preferred option in 2022.

Mr Dedoncker said the exact timing would depend on the ownership option chosen, the work required and timing it to market conditions.

However, he was excited at the possibility of a locally-owned entity and what it could do. 

“Now we get the opportunity to demonstrate what we’re capable of,” he said.

“The idea that we can leverage New Zealand where we need to but have the independence to make choices here, decisions here with a local board here is a fantastic next phase for this business.”

Posted , updated 

Dairy giant Fonterra Australia looking at options for Australian ownership
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