New Zealand dairy cooperative Fonterra has returned to profitability with a net profit after tax of NZ$80 million ($55m). However, according to chief executive Miles Hurrell, Fonterra’s earnings performance is still not where it should be (its 2019 interim results show a 29 per cent decline in normalised earnings before interest and tax) and the business needs to be reset before it can begin to deliver sustainable earnings.
“Our three-point plan involves taking stock of our business and conducting a portfolio review, getting the basics right and improving our forecasting,” Hurrell explained. “We’ve made good progress so far and we will continue to take these steps in the second half [of the year] to firm up our foundations and strengthen our balance sheet.”
Part of this process will involve the sale of Fonterra’s 50 per cent share (part of a joint venture with FrieslandCampina) in DFE Pharma, a supplier of pharmaceutical excipients, which are used as a carrier agent in medicines such as tablets and powder inhalers.
Meanwhile, the cooperative has sold its interest in its Venezuelan consumer joint venture, Corporacion Inlaca, to Mirona, an international food business and has received strong interest in the sale of ice cream maker Tip Top.
Fonterra is also actively considering its options for its shareholding in Beingmate. As a result, according to Hurrell, the business is “well on track to meet our target to reduce end of year debt by $800m”.