Fonterra’s IPO idea for Aussie operations

THE world’s biggest dairy exporter, Fonterra, is considering selling its Australian business via an initial public offering.

The move came as New Zealand-based Fonterra’s revenue was flat at $NZ20.57bn ($19.9bn) in the year to July 31, while net profit sank 9 per cent to $NZ599m.

Sales across its Australian operations were consistent at $1.69bn versus $1.7bn the prior year.

The proposed IPO could value Fonterra’s Australian business at more than $1.2bn, based on earnings before interest and tax of $NZ74m – a 37 per cent increase on the previous year.

This would put its potential market capitalisation not far behind Bega Cheese’s $1.6bn.

Chairman Miles Hurrell said under the proposed IPO, Fonterra would retain a “significant stake” in its Australian operations and it was “one option” being considered as part of a broader ownership review.

“By having access to ongoing external capital, we believe the Australian business will be best placed to deliver on its strategy and capture its full potential,” Mr Hurrell said.