Sector News

Fonterra extremely disappointed with Beingmate’s financial losses

January 22, 2018
Food & Drink

Fonterra said it is “extremely disappointed” by the announcement that China’s Beingmate Baby & Child Food – which it owns an 18.8% share in – issued a forecast earnings downgrade to an estimated loss of between CNY 800 million ($125 million ) and CNY 1 billion ($154 million).

The Chinese dairy company had previously announced a forecasted loss of between CNY 350 million ($54.7 million) and CNY 500 million ($78.1 million) for its financial year ended 31 December 2017.

Fonterra bought a stake in the company in 2015 with an investment of $615 million.

Following the announcement, Fonterra has expressed its concern about the on-going performance of Beingmate and will “consider the financial implications on our investment for the purposes of our upcoming interim financial results”.

Four Beingmate directors, including the two directors designated by Fonterra, have expressed reservations relating to some aspects of Beingmate’s financial management and reporting practices.

In a statement, Fonterra said: “We have total confidence in the judgement of our designated directors (Johan Priem and Christina Zhu) and that their actions are in the best interests of Beingmate and all of its shareholders. We are concerned about the reservations they have expressed and are seeking clarification on the matters of concern.

“Despite Beingmate’s recent performance, the strategic rationale for our broader partnership with Beingmate still stands. We are disappointed that Beingmate is not maximising the opportunity created by the early registration of its 51 formulations under the new registration rules.

“The Chinese market is growing rapidly and within five years, forecast demand for infant and baby dairy products will be more than the total for other global markets, so the potential remains.”

China will overtake the US as the world’s largest dairy market by 2022 with drinking yogurt a key growth driver, according to market research producer Euromonitor International.

China is one of Fonterra’s largest global markets, accounting for NZD $3.4 billion ($2.48 billion) of sales revenue.

Source: FoodBev

comments closed

Related News

February 4, 2023

Unilever names FrieslandCampina’s Hein Schumacher as next CEO

Food & Drink

Schumacher will replace Alan Jope, who announced his decision to retire last September, less than a year after a failed attempt by Unilever to buy GlaxoSmithKline’s consumer healthcare business and just months after activist investor Nelson Peltz joined the company’s board.

February 4, 2023

Tetra Pak execs flag plant-based ice cream development hurdles as indulgent offerings expand

Food & Drink

Globally, plant-based ice creams have doubled their share of the market over the last five years, according to Tetra Pack. Pea protein and coconut milk are leading the way, but Tetra Pak cites data showing that oat-based ice cream launches have doubled in the previous year.

February 4, 2023

Examining the meaning of eco-labels: Is it time for mandated methodology?

Food & Drink

A myriad of so-called eco-labels are being rolled out across various F&B products, but with no gold standard or strict rules governing precisely what the logos mean and what methodology is behind them, concerns are growing that they will confuse consumers and ultimately be counterproductive.

How can we help you?

We're easy to reach