Fonterra to invest US$567.1M in its facility

NEW ZEALAND – Fonterra has announced plans to invest US$567.1 million (NZ$1 billion) to expand its protein manufacturing network over the next three year in its South Island facility.

As global demand for advanced protein continues to grow, Fonterra said the investment on the South Island will also improve the co-op’s environmental performance in terms of emissions and water impact.

The investment will be funded using capital retained from the divestment of Mainland Group alongside Fonterra’s cash flow.

The co-operative expects total capital investment of approximately NZ$1.3 billion to NZ$1.6 billion per year over the next three years.

Fonterra noted that the new capacity will give it greater flexibility to move milk away from whole milk powder and other commodity streams and toward higher-value products, while strengthening existing customer relationships and opening additional growth opportunities.

“These projects position the co-op to respond to changes in how people want to consume dairy, with a growing focus on sustainably produced, protein-rich and nutrient-dense foods,” Richard Allen, Fonterra chief executive, said.

“They are critical to our future value growth and improve our optionality, increase our capacity and, as a result, strengthen returns for farmers and shareholders over the long term,” he added.

Fonterra completes sale of Mainland Group to Lactalis

The company recently completed the sale of its global consumer and associated businesses, Mainland Group, to Lactalis.

The sale comprises Fonterra’s global Consumer business and Consumer brands (excluding the consumer business in Greater China, where Fonterra will continue to own the Anchor brand), the integrated Foodservice and Ingredients business in Oceania, the integrated Foodservice business in Sri Lanka and the Middle East and Africa Foodservice business.

Chairman Peter McBride noted that the completion of the sale is a significant milestone which sets the Co-op up for the future.

He added that through the company’s high-performing Ingredients and Foodservice businesses, they will sell innovative dairy products to customers globally under NZMP and Anchor Food Professionals brands.

The product supply agreements between Fonterra and Lactalis include a raw milk supply agreement, under which Fonterra is to supply raw milk to Lactalis for a minimum term of 10 years, with automatic renewal until terminated.

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