Fonterra is raising questions as its major Chinese investment partner forecasts a multi-million dollar loss.
The New Zealand diary giant released a statement on Monday saying it was “extremely disappointed” in the performance of infant formula producer and distributor Beingmate Baby & Child Food.
The Chinese firm announced a loss of between $171 million to $214m for the financial year ending last December.
Fonterra has a 18.8% shareholding in the company and was only expecting a loss of between $75m to $107m.
Fonterra says “more information” is being gathered on the recent downgrade announcement and it will “consider the financial implications” of its investment for upcoming financial results.
“We are also aware that as part of this 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.
“We are concerned about the reservations they have expressed and are seeking clarification on the matters of concern,” the statement says.
China is one of Fonterra’s largest global markets, accounting for NZ$3.4 billion of its sales revenue and a normalised earnings contribution of more than NZ$200 million in the 2017 financial year.
