Fonterra sells China farms to pay down debt
Completion of the sale is expected to occur within this financial year establishing China farms
Stocks impacted: Fonterra (FCG)
New Zealand dairy giant has sold its China Farms business for $514 million to pay down debt and focus on domestic producers. The China Farms business returned to profit this year while reporting a net loss in 2018 and 2019. The sale of the farms would allow Fonterra to prioritize its competitive advantage in other areas of the business, according to the company. Fonterra expects to use the cash proceeds from the two transactions to pay down debt, as part of its previously announced overall debt reduction programme. Over the last 10 years Fonterra has invested about $1 billion in establishing China farms. Completion of the sale, that is subject to regulatory approval, is expected to occur within this financial year. As a reminder, in September, the firm reported a full-year profit after tax of $NZ659 million following two years of losses. Fonterra stocks finished 0.25% higher on Monday.
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