22 January 2018
FONTERRA RESPONDS TO BEINGMATE''S FORECAST EARNINGS DOWNGRADE
Last night, Beingmate Baby & Child Food Co Ltd (Beingmate) issued a forecast
earnings downgrade for its financial year ended 31 December 2017, revising
the previously announced forecast loss of RMB 350 million - RMB 500 million
to a forecast loss of RMB 800 million - RMB 1 billion (NZ$171 - NZ$214
million).
As an investor in Beingmate (18.8 per cent shareholding), we are extremely
disappointed by this announcement and the on-going performance of the
company. We are seeking more information on the forecast downgrade in
addition to receiving Beingmate''s full year financial statements. We will
consider the financial implications on our investment for the purposes of our
upcoming interim 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.
Despite Beingmate''s recent performance, the strategic rationale for our
broader partnership with Beingmate still stands. We are disappointed that
Beingmate is not maximising 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 the
potential remains.
China is one of Fonterra''s largest global markets, accounting for NZ$3.4
billion of our sales revenue and a normalised earnings contribution of
greater than NZ$200 million in FY17. Our business in China has been enabled
by our integrated strategy, comprising of Ingredients, Consumer and
Foodservice, our China farms and our Beingmate partnership.
ENDS
For further information contact:
Campbell Hodgetts
Fonterra Communications
Phone: +64 27 563 4985
24-hour media line
Phone: +64 21 507 072
End CA:00313292 For:FSF Type:MKTUPDTE Time:2018-01-22 14:12:40