Fonterra 'disappointed' by Beingmate
Beingmate revised its previously announced forecast loss of RMB 350m-RMB 500m, to a forecast loss of RMB 800m-RMB 1bn ($125m-$156m).
Fonterra, which has an 18.8% shareholding in Beingmate, said it was ‘extremely disappointed’ by the announcement and the ongoing performance of the company.
Looking for answers
The New Zealand cooperative said it was seeking more information on the forecast downgrade, as well as receiving Beingmate’s full-year financial statements.
It added that this will determine the financial implications on its own investment for the purposes of Fonterra’s upcoming interim financial results.
Asking questions
Fonterra added it was aware that, as part of the announcement, 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.
“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,” Fonterra’s statement said.
“We are concerned about the reservations they have expressed and are seeking clarification on the matters of concern.”
Not taking advantage
However, Fonterra said the strategic rationale for the partnership was still valid, but added it was disappointed Beingmate “is not maximizing 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 Fonterra said the potential remains.
China is one of Fonterra’s largest global markets, accounting for NZ$3.4bn (US$2.48bn) of sales revenue and a normalized earnings contribution of greater than NZ$200m (US$146m) in FY17.
