[16 December/NZ Herald]

Fonterra is optimistic that Beingmate Baby and Child, the Chinese infant formula company that the co-op has an 18.8% interest in, has turned the corner. The co-op earlier this year wrote down the value of the stake by $405 million. The company has forecast a 28m renminbi (RMB) ($5.9m) to 78m RMB ($16.4m) net profit for 2018. Chris Greenough, Fonterra’s Strategic Portfolio Manager, commented that the result was a big change from previous years, with the short to medium term future looking promising. Mr Greenough said Beingmate’s manufacturing capacity was still world class with many potential growth options available within the existing capacity. Beingmate has had issues with consumers to shifting to online purchasing for infant formula in China and the rapid expansion of the daigou trade channel. Mr Greenough suggests previous management did not understand the distribution issues as well they should have, but there has never been a quality issue with Beingmate adding supply chain issues are easier to fix than underlying product issues. News that a subsidiary of China’s Great Wall had taken a 5.09 per cent stake in the company and would enter into a strategic co-operation agreement with Beingmate to assist in the turnaround was a good “very good sign” according to Mr Greenough. He also noted that although Beingmate had been disappointing, the level of New Zealand milksolids moving to China has increased many, many, many times.