Fonterra has announced a first half loss and detailed a succession plan for its chief executive officer Theo Spierings.
The NZ dairy giant said a $NZ405 million writedown on its Chinese partnership with Beingmate and a $NZ183 million legal settlement with Danone would result in a $NZ348 million net loss for the six months to January 31.
In September 2014, Fonterra invested $550 million in the Chinese infant formula company, Beingmate, a partnership that has yet to fulfill expectations.
“While we appreciate the substantial opportunity and privilege of our business in China, our shareholders and unitholders will be rightfully disappointed with this outcome," Fonterra chairman John Wilson said.
“Beingmate’s continued under-performance is unacceptable. The turnaround of the investment is a key priority for our senior management team.
“The opportunity in the Chinese infant formula market remains, as does the potential for our Beingmate partnership – but an immediate business transformation is needed for Beingmate to benefit from the ongoing changes in the market.”
The Danone settlement relates to the damages caused by the whey protein recall four years ago.
Fonterra's overall sales revenue rose six per cent to $NZ9.8 billion, thanks to a recovery in global dairy prices.
The company said that the Fonterra board and its CEO Theo Spierings agreed that Spierings will leave his role later this year as part of a planned CEO succession process.
