Fonterra ends joint venture FrieslandCampina

Fonterra will sell its interest in DFE Pharma, the joint venture with dairy cooperative FrieslandCampina. This may be due to the disappointing results of the New Zealand dairy cooperative.

Fonterra returned to profit in the second half of the 2018 financial year, which runs from July to January. The dairy cooperative has been making a loss since July 2017, but returned a net profit of $80 million (€48 million) in the past financial year. On the other hand, the normalized turnover of the cooperative has decreased. It decreased by $90 million (€54 million) to $9,75 billion (€5,9 billion).

Subsidiaries for sale
Despite the dairy business returning to profitability, Fonterra has reported divestment of a number of subsidiaries, including its 50% share in DFE Pharma. This company specializes in various excipients for medicines and is also a joint venture with FrieslandCampina.

Jan-Willem ter Avest, spokesperson for FrieslandCampina, says that FrieslandCampina will retain its share (the other 50%). "DFE Pharma fits in well with our strategy." Ter Avest does not want to answer the question whether FrieslandCampina will buy up the part put up for sale. DFE Pharma supplies raw materials for medicine capsules for 20% to 30% of all medicines worldwide.

Pay off debt
Fonterra's goal is to pay off its $800 million (€482 million) debt. Fonterra's CEO Miles Hurrel said the company is on track to pay off its debt, he said in a statement. In addition, he is happy to see black numbers again. Nevertheless, he indicates that Fonterra is a long way from being there.

After the publication of the annual figures, Fonterra's share fell by 2,51%. This is probably because EBITA decreased by 29% to $134 million (€80,1 million). This means that the company's profit before the deduction of interest and tax has decreased.

*This article is about New Zealand dollars

Tim Roetman

Tim Roetman has been working as a junior editor at livestock farming since November 2018 Boerenbusiness† He mainly writes about (price) developments in the pig and dairy market.

t.roetman@boerenbusiness. Nl

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