More assets under Fonterra's control at the approach of the $ 800 million debt reduction deadline

Mr Fonterra indicates that he is on track to reach his debt reduction target of $ 800 million by the end of the fiscal year, as more money is forthcoming. assets will be reviewed.

After recording an after-tax loss of $ 196 million for fiscal year 2018, the first annual loss of its 17-year existence, the co-op undertook an extensive overhaul of all of its activities under the new CEO of Miles Hurrell. Chief Financial Officer, Marc Rivers.

One of its immediate objectives was to improve the balance sheet and reduce debt by $ 800 million by July 31, which would be possible in part by reviewing its investments and the sale of its assets.

Nine months after the start of the review, Fonterra appears to have made progress in achieving its goal with a range of assets already sold, including the Kiwi Tip Top ice cream company in mid-May to the manufacturer. international Froneri for $ 380 million, and more on the cutting block.

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After the release of its third quarter results on Thursday, Fonterra said two core assets of 100 percent owned farms in China and its joint venture Dairy Partners Americas (DPA) Brazil were the last assets to be reviewed.

Hurrell said the two production centers examined included seven farms with about 31,000 dairy cows. She also owned two farms in a joint venture that were not to be reviewed.

Fresh milk sales in China continue to be an attractive prospect for Fonterra and the two unrevised farms will continue to produce fresh milk, he said.

"However, that does not necessarily mean we need to have large amounts of capital in agricultural clusters," Hurrell said.

His 50% stake in the Brazilian joint venture could be sold, he said.

On Thursday, Fonterra lowered the price range of milk on the farm scheduled for 2018-2019 to between $ 6.30 and $ 6.40 per kilogram of milk and $ 6.25 to $ 7.25 per kg. kg for the new season.

In the nine months to April 30, Fonterra achieved a turnover of $ 15 billion, up 1%, and an increase in sales volume of 4%. Gross margin was $ 2.2 billion, down 3%.

At the ensuing press conference on the results, the focus was on the strategic review of Fonterra.

Rivers said Fonterra had invested up to about $ 1 billion in Chinese farms. The value of the Chinese farms and the losses they suffered were not revealed, he said.

"We have suffered losses over these years as our business grew."

The amount invested in the Brazilian joint venture has not been disclosed, but this figure will be available as a result of the asset review, he said.

"We are making very good progress on the debt reduction goal.

"We will take our time with these things and make sure that we make these outings in a way that maximizes value, and we will do it in a very responsible way."

Fonterra confirmed Thursday the closure of its plant in Dennington Australia later this year, which would result in the loss of 98 jobs.

Hurrell said the site "was just not viable in the long run".

Fonterra has also launched the process of selling its 50% stake in DFE Pharma, a joint venture created in 2006 between Fonterra and FrieslandCampina.

DFE Pharma is one of the largest suppliers of pharmaceutical bulking agents in drugs such as tablets and powder inhalers.

It also sold its interest in its Venezuelan consumer joint venture, Corporacion Inlaca, to Mirona, an international food company, for $ 16 million.

The decision to sell was taken because of instability in Venezuela that had led to "harsh operating conditions".

In December, Fonterra reached an interim agreement to dissolve its joint venture Darnum with the Chinese company Beingmate.

Fonterra bought a 19% stake in Beingmate in 2014 for $ 750 million, but this investment was depreciated by $ 405 million.

He is now considering his options for his part in Beingmate.

By divesting in Tip Top, DFE Pharma and Beingmate would help meet its debt reduction target, Rivers said.