Just now, Fonterra announced that it has completed the sale of two wholly-owned Chinese ranches located in Yingxian County, Shanxi and Yutian, Hebei.

The announcement stated that the above-mentioned transaction has been approved by the Chinese anti-monopoly agency and other regulatory authorities, and the buyer is the previously announced Inner Mongolia Youran Animal Husbandry Co., Ltd. Xiaoshidai introduced that the latter belongs to China Youran Animal Husbandry Group Co., Ltd. controlled by Yili. In November last year, Youran Animal Husbandry disclosed a prospectus on the Hong Kong Stock Exchange, planning to raise funds and go public, and it is rumored to raise about 500 million US dollars.

Xiaoshidai checked the industry and commerce data today and found that the operating entities of the two pastures have recently completed their name changes. Among them, "Fontran (Yingxian) Ranch Co., Ltd." has changed its name to "Shanxi Youran Tianhe Animal Husbandry Co., Ltd.", and "Fontran (Yutian) Ranch Co., Ltd." has changed its name to "Tangshan Youran Animal Husbandry Co., Ltd." limited liability company".

More than 2.5 billion in revenue

According to Fonterra's announcement, the transaction proceeds from the sale of the two wholly-owned ranches included the original price of 513 million New Zealand dollars, plus a settlement adjustment of 39 million New Zealand dollars, resulting in a cash gain of 552 million New Zealand dollars (approximately RMB 2.528 billion).

Xiaoshidai introduced that as part of the company's strategic adjustments, Fonterra announced the sale of two wholly-owned farms and a joint venture farm equity in China last year.

Among them, the joint-venture ranch refers to the Hangu ranch jointly held by Fonterra and Shounong. Previously, Fonterra had agreed to sell its 85% interest in Hangu Ranch to Beijing Sanyuan Venture Capital Co., Ltd. (hereinafter referred to as "Sanyuan") for 42 million New Zealand dollars (equivalent to 190 million yuan). Sanyuan had previously owned a 15% minority stake in the ranch, and this time it exercised its priority to purchase Fonterra's rights.

Fonterra said today that the sale of equity in the aforementioned joint venture ranches is in progress and is expected to be completed this fiscal year.

In today's announcement, Fonterra CEO Miles Hurrell described the completion of the sale as "an important milestone" after Fonterra's strategic update. "Fonterra has contributed to the development of China's dairy industry through the establishment of these ranches. We are very happy to now transfer ownership to Youran for the next stage of development." He said.

Xiaoshidai also noticed that in a recent report by New Zealand media Stuff, Fonterra's Chief Financial Officer Marc Rivers revealed:“The ranches that Fonterra has invested in and developed in China are now functioning well. Whether these ranches are owned by us or others does not really matter, as long as they exist for the benefit of Chinese consumers. Therefore, I think our contribution is commendable. "He says.

Optimistic about Greater China

Undoubtedly, as the fastest-growing market for the group's business, the Greater China region is still a "strategist" for Fonterra.

Miles Hurrell also reiterated in the announcement today that Fonterra will be committed to its development in China. "The Chinese market is changing rapidly, which inspires us to continue to innovate.Our Chinese team will now continue to work on new products, new applications and close cooperation with customers,Create value with New Zealand dairy farmers' milk. "

Miles Hurrell also said that from the 2021 fiscal year interim results, it can be seen that the Chinese business performed well, which was due to the strong demand for New Zealand dairy products. "With these foundations, we can continue to develop catering services, consumer goods and raw materials businesses in Greater China," said Miles Hurrell.

Fonterra CEO Miles Hurrell

According to Fonterra's 2021 fiscal year interim results announced in March, in the first half of fiscal year 2021 (from August 1, 2020 to January 31, 2021), Fonterra Greater China adjusted earnings before interest and taxes (EBIT) It was 339 million New Zealand dollars (approximately RMB 1.583 billion), an increase of 38%.

Fonterra CEO Miles Hurrell also praised the remarkable performance of the Chinese market many times at the performance meeting. He believes that the business performance of Greater China fully reflects the strength of Fonterra's catering business in the region, the further improvement of consumer brand business performance, and the strong economic recovery shown by China in the post-epidemic period.

Hurrell also emphasized that the Greater China region is still one of Fonterra's most important strategic markets. "We are always committed to enhancing the value of our business in Greater China, and at the same time, we will bring the advantages of New Zealand milk to Chinese customers and consumers in an innovative way, and achieve this goal by cooperating with local Chinese companies," he said.

The above report by Stuff pointed out that Fonterra is increasingly reliant on the Chinese market. China accounted for 46% of its pre-tax profits in the three regional markets in the first half of the year, up from 35% last year. "We believe that China will become a net importer of dairy products for a long time. As long as they import dairy products, then we hope to become an exporter of dairy products." "China is a very important market for us. I think it will always be like this." Marc Rivers said.

Previously, Fonterra's Greater China CEO Zhou Dehan had revealed in his exchanges with Snack Foods that both localization innovation and digital strategy will be the company's key strategy in the Chinese market and the key to the continued growth of its business in China.

Zhou Dehan, CEO of Fonterra Greater China

With the opening of the Fonterra Group and the American Ankang Shanghai Innovation Center last year, Fonterra hopes to inject New Zealand's R&D capabilities into the innovation center to help develop more locally innovative products in the Chinese market. In addition, Fonterra also plans to upgrade and transform the four existing domestic application centers this year, and also plans to invest in the construction of a fifth application center in Wuhan. At the same time, it also plans to accelerate the layout of catering services and expand the business to 30 within this year -40 new cities.

In terms of digitalization, Fonterra's consumer brand business reached a strategic partnership with Xiaomi's marketing and gourmet recipe community Douguo Gourmet last year, hoping to tap into more market opportunities with the help of big data.