Fonterra Co-operative Group Ltd has confirmed that the sale of Fonterra and Nestlé’s dairy joint venture in Brazil is now complete.
The Dairy Partners Americas (DPA) Brazil joint venture, which was owned 51% by Fonterra and 49% by Nestlé, has been sold to French dairy company Lactalis for BRL 700 million (€133 million).
Fonterra said the proceeds of the sale offset debt related to the joint venture business, which means there will be little cash impact on the New Zealand co-op’s earnings.
Fonterra chief executive Miles Hurrell said that when the co-op announced the sale in December 2022, it noted the sale was subject to regulatory approvals. These approvals have now been received.
“With our decision to focus on our New Zealand milk pool, the sale of DPA Brazil means we can prioritise our resources to the businesses that are core to our strategy,” Hurrell said.
The co-op noted that there is a negative foreign currency translation reserve (FCTR) balance of approximately NZ$70 million related to Fonterra’s ownership of the DPA Brazil asset.
This will be reflected as a non-cash accounting reclassification in co-op’s profit and loss statement.
“Final transaction proceeds remain subject to customary post-completion adjustments.
“As with previous one-off transactions, Fonterra’s FY24 announced forecast earnings range of 45-60 cents per share will continue to reflect only the underlying performance of the business,” the co-op said in a statement.
In September, Fonterra Co-operative Group reported a profit of NZ$1.6 billion – up 170% – for the financial year to July 31, 2023.
The co-op, owned by 9,000 farmers, also reported a final 2022/23 season farmgate milk price of NZ$8.22/kgMS.
It also reported full-year milk collections of 1,480 million kgMS .