Dairy giant Fonterra has begun a series of roadshows with investors that might be interested in buying its consumer brand businesses.
Fonterra intends to sell its consumer businesses, which include brands like Anchor, Kapiti and Mainland, as part of a programme designed to improve returns for its farmer-shareholders.
The combined consumer business is being shopped around under the name Mainland Group, and investors are being told the combined assets had an annual revenue of $4.9 billion in its last financial year.
The sale could be either “trade” sale, or an initial public offering (IPO) to investors like KiwiSavers, presumably on the New Zealand Stock Exchange.
The roadshow begins as Fonterra said it had increased its 2025 full year earnings guidance from 40 to 60 cents per share (cps) to 55 to 75cps as a result of strong dairy prices.
The result was testament to the underlying strength of Fonterra’s core Ingredients business, but was also partly due to the resilience of the consumer brands which it intends to sell.
“Our Consumer channel has shown good volume and margin growth while recovering the higher Farmgate Milk Price this season,” Hurrell said.
The consumer business had operations in Australia, New Zealand, South East Asia, Sri Lanka as well as selling dairy products into the Middle East and Africa.
Asia was a growing market for dairy products, both as a result of population and per capita GDP growth.
It was the largest consumer dairy business in Australia and New Zealand with what Fonterra called a “portfolio of blue chip” consumer brands.
As well as cheese, butter, milk, yoghurt and ice cream, Mainland Group produced infant formula and “healthy ageing” dairy products, however, it also included foodservice and ingredients operations selling to the likes of restaurants and other food manufacturers.
It has 15 factories in New Zealand, Australia, Sri Lanka, Malaysia and Indonesia, with plants in Takanini in Auckland, Eltham and Palmerston North processing consumer products from New Zealand and Australian-farmed dairy.
A note in the investor roadshow presentation suggest a buyer of Mainland Group could seek to “optimise” costs by automation and consolidation of its manufacturing facilities, and perhaps using third-part manufacturers.
Dairy remains an industry facing climate challenges, but Fonterra was telling potential investors that more than half of Mainland Group farmer suppliers had farm environmental plans.
It said 93% of its New Zealand farmer-suppliers had such plans, though only half of its Australian farmer-suppliers had them.
The roadshow meetings will be held in New Zealand, Australia and Asia.
They are being fronted by Mainland Group chief executive elect René Dedoncker and chief financial officer elect Paul Victor.
Hurrell said the meetings were an important step in the process of testing the merits and value of an IPO, which Fonterra was exploring as a divestment option alongside a trade sale.
“We are pleased to be making progress in both the potential trade sale and IPO processes and will continue to keep our farmer shareholders, employees and the market updated on milestones,” he said.
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