New Zealand eyes have been so focussed this week on an event 20,000kms distant that they might not have noticed here at home another extraordinary event, taking place on the NZX.
The market capitalisation of a company which listed as recently as 2012 on the local sharemarket soared past the $12bn mark and is hard on the heels of Meridian Energy, which has the highest valuation of NZ-based companies on the NZX at $12.3bn.
The challenger is a2 Milk, which sells a specialised type of milk with what it claims are health benefits.
A2 has had a chequered history but its market valuation keeps climbing, racing ahead of blue chips like Auckland International Airport and Fisher & Paykel Healthcare and leaving in its dust some one-time market darlings like Fletcher Buildings (market cap $4.3bn) and Spark ($7.2bn). Continue reading “Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star”
Westland Milk Products farmer-shareholders voted overwhelming in the past week to accept the $558m takeover bid by Chinese giant Yili for the co-op’s milk processing operation.
For individual farmer shareholders, the bid means an injection of around $500,000 each into their bank accounts, plus better returns for their milk over the next 10 years.
No wonder 94% of the 96% eligible shareholders cast their votes in favour. West Coast farmer and Federated Farmer president Katie Milne, who is also a WMP director, said it was an “absolutely stunning” result for West Coast farmers.
Yet the sale is lamented by many local leaders, as well as by NZ First whose spokesman Mark Patterson wailed about an “alarming trend”. Continue reading “Yili’s gain on the West Coast brings a $500,000 windfall to farmers – but local leaders lament sale to foreigners”
Is Westland Milk one of NZ’s “key strategic assets”?
NZ First is adamant it is and believes the government should be a applying a “national interest test” to the proposed sale of the company to the Chinese dairy giant Yili.
Those who see heavily indebted companies like Westland Milk struggling to make a profit and not even matching Fonterra’s payout to its suppliers might take a cooler view to the proposed sale.
Federated Farmers dairy chairman Chris Lewis said he had received “mixed” feedback from West Coast farmers on the deal, which will require 75% approval. Continue reading “NZ First is not alone in worrying at the implications of a Westland Milk sale to Yili”
Climate change warriors who are demanding NZ’s dairy herd be culled immediately to meet targets of lower methane emissions may be confounded by the evidence that leading farmers are already succeeding in lowering gas emissions. And the prospects of huge advances in other aspects of dairying, particularly in AI, robotics and the development of new crops, portend further gains..
And what’s holding up another key development?
It’s the intransigence of the so-called Green lobby against the introduction of genetic technology.
In a Ministry for the Environment briefing to Environment Minister David Parker in June 2018, officials warned NZ could fall behind the rest of the world in genetic engineering technologies. They said the rapid pace of technological change is forcing countries to clarify their positions, and recommended the government update the law. Continue reading “Culling our cows isn’t the only way to reduce emissions – but greenies shy from the GE option”
Agriculture Minister Damien O’Connor didn’t win too many new friends (and may have lost some) with his decision on the review of the Dairy Industry Restructuring Act, the 2001 legislation which set up Fonterra supposedly to become a “ national champion”.
We all know how that has turned out.
So what were the reactions to O’Connor’s latest move to improve the legislation which initially had the objective of “promoting the efficiency of NZ dairy markets”?.
Fonterra chairman John Monaghan said the company was disappointed it still has to supply milk to large, export-focused businesses. Continue reading “Fonterra and farm leaders gripe at O’Connor’s DIRA decision – Greenpeace is even more grouchy”
On the face of it, it’s a no-brainer. Weighed down with debt, Westland Milk, based in Hokitika is financially on its knees. Riding to its rescue, Chinese dairy giant Yili has come in with a $588m buyout deal which will yield $3.41 a share to the co-op’s farmer shareholders, and, as well, absorb Westland’s debt and liabilities.
According to Westland, the nominal value of its shares has ranged from 70c to $1.50 per share. For the average-sized Westland farm, the share offer translates to about half a million dollars cash.
The offer looks even more attractive since Westland had to cut its milk payout forecast, while other companies’ forecasts are rising. Westland, which has grown out of the West Coast’s 150-year dairy heritage, hasn’t paid a competitive milk price for several years.
The conditional deal comes with extra sweeteners. Yili has committed to collect all milk supply. It will also pay a competitive price of at least as much as the Fonterra farmgate milk price for 10 years.
But why would Yili go that distance? Continue reading “Yili bid for Westland Milk raises questions about dairy co-operatives – and Fonterra’s ownership”
Encouraging signs emerged this week that key elements in the structure of NZ’s largest export industry are whipping themselves back into the shape they should be.
The giant co-op Fonterra has gone back into the black with a net profit of $80 million in the first half, after previously recording a net loss of $186m.
Meanwhile Westland Milk Products, NZ’s second biggest dairy co-op, is in line to be sold to China’s biggest dairy company, Yili, in a $588m transaction that would inject nearly half a million dollars into the operations of each of its suppliers.
Alongside these co-ops, the Canterbury-based Synlait has underlined its strength in the industry with a solid result in its half-year after achieving higher sales volumes. It reported a half-year net profit of $37.3m, 9.6% lower than the $41.3m in the previous first half, but with the focus on investing for growth, with a second processing plant due to come on stream for the 2019-20 season. Continue reading “Comforting news for dairy farmers as companies report results and the world price rises again”