Fonterra expects $96m from changes in Americas

Last updated 09:39 28/05/2014

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A shake-up of Fonterra's partnership with Nestle in the Americas will see the dairy co-operative receive about $96 million for the sale of some of its businesses.

The two companies have realigned their 50-50 joint venture in Dairy Partners Americas (DPA), the biggest dairy company in South America.

Fonterra will take a 51 per cent controlling stake in DPA Brazil, and together with a partner, will buy out Nestle's share of DPA Venezuela.

However, it will sell its share in DPA Ecuador as well as its stake in DPA's milk powder manufacturing business. On balance, the dairy giant expects to realise close to $100m in the next financial year, if the changes are signed off by regulators.

Fonterra's Latin American operation earns $3.5 billion in revenue a year from consumer dairy, food service and dairy ingredients.

Chief executive Theo Spierings said the joint venture had performed well for 10 years, but it was time to adjust it to better reflect each company's strategy in the region.

Managing director of Latin America Alex Turnbull said the region's economies had undergone considerable change over the period.

"We've seen increased prosperity in markets like Brazil with rapid urban growth and a focus on healthy nutrition driving demand for dairy products," he said.

The bigger stake in DPA Brazil meant Fonterra would be well placed to drive its volume and value growth strategy, he said.

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