Although the governments in Canberra and Wellington declare they are both committed to advancing the Single Economic Market (SEM) agenda, building on the success of the Closer Economic Relations (CER) Trade Agreement, the recent meeting of the respective trade ministers in Auckland didn’t produce much more than an array of platitudes, and certainly left business lobbies on both sides of the Tasman yawning.
Port of Tauranga has cracked the $100M net profit mark for the first time, underlining how efficient it has become as NZ’s largest port. The NZX-listed Mount Maunganui-based company also reported this week its long-term credit rating had been elevated from ‘BBB+’ to ‘A-‘ by credit rating agency Standard & Poors. The short-term rating was affirmed at ‘A-2’.
PoT’s market capitalisation hit $4.3bn in the wake of its latest result, a huge leap from the $78m at the time of its IPO in 1992. The company has provided a river of gold for the Bay of Plenty Regional Council, which retains 56% of the shares.
So why have other local bodies, which own ports, been so slow to follow the example of the BOP Council in partially privatising their port businesses and reaping the rewards?
Dairy giant Fonterra has taken a hammering in the media in the wake of its disclosure it expects to report a full-year loss of as much as $675m and won’t pay a dividend as it slashes the value of global assets. It will be the second annual loss in a row.
Investment guru Brian Gaynor in the NZ Herald argued Fonterra’s farmers have drained the co-op almost dry in terms of milk prices and dividends and have left it in an extremely vulnerable position. Earlier another Herald columnist, Matthew Hooton, contended NZ has put all its milk in one pail – in a company with inadequate governance and capital to match its aspirations.
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”
The PM, Jacinda Ardern, received what her handlers would have perceived as unexpected criticism from the media after she gave a pre-budget speech to an Auckland business audience. One of those in the audience was said to have described it as an “ideological fairytale”; others apparently were disappointed it had “nothing for business”.
Given she did list as two of the five priorities in the budget as being “creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy; and supporting a thriving nation in the digital age through innovation, social and economic opportunities”, the criticism itself could be regarded as a bit “ideological”.
Surely business doesn’t expect government hand-outs, even if it is labeled a “well-being” budget?
But there seems little doubt that the mood of business is downhearted these days.
NZ co-ops have been getting a bad media rap lately. Take Fonterra, for example. Andrea Fox, one of the country’s best-informed journalists specialising in agriculture issues, started a new series in the NZ Herald with the headline: “Fonterra: Disappointment and soured dairy dreams”.
Noting the dairy goliath had a silver-spoon birth nearly 18 years ago she wrote:
“Today the co-operative is looking a bit like the family’s overweight, lazy teenager hogging the remote on the biggest couch in the room And the credit card bills are coming in”.
After Fonterra posted a historic first net loss of $196m, Fox says calls are heating up for the company to be split up and a company, perhaps listed, spun off it, open to outside capital investment to chase high-value product markets. Continue reading “Fonterra could learn lessons in enterprise and growth from Australia’s Wesfarmers”
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”