New Zealand’s Fonterra Co-op announced that it has agreed the sale of its dairy business in Brazil which was a joint venture with Nestlé. French dairy giant, Lactalis, which already is a largest player in the country’s dairy industry has agreed to pay BRL 700 million (€125m) for the operation.
The announcement of the sale comes only a month after Fonterra revealed it had found a buyer for its business in Chile.
The co-op said the sale of the Brazilian business is aligned with its strategy of focusing on its New Zealand milk pool.
That focus seems to be paying off, with a trading update last week showing a strong start to the 2023 financial year. Earnings per share (EPS) guidance was upgraded from 45c to 60c per share to 50c to 70c per share.
Fonterra CEO Miles Hurrell warned that the company continues to feel the impact of geopolitical and macroeconomic events, saying there are “higher costs at every point in our supply chain.”
He also said that the volatility which dominated the trading environment in 2022 is likely to continue in the short to medium term, which is why the range in forecast EPS has widened from 15c to 20c.