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Fonterra to merge New Zealand and Australia businesses to form Fonterra Oceania

Fonterra has announced plans to merge its New Zealand and Australia business units, in a move to strengthen its presence in the competitive dairy market. The merger, set to take effect on 1 May 2024, will see Fonterra Brands New Zealand (FBNZ) and Fonterra Australia consolidate under the banner of Fonterra Oceania, as disclosed in a filing on the New Zealand Exchange. Miles Hurrell, CEO of Fonterra, highlighted the integration's objective of fortifying the company's offering across the trans-Tasman region. "By combining our operations in New Zealand and Australia, we aim to enhance our competitiveness in a challenging market environment," Hurrell stated in the filing. FBNZ features a diverse portfolio of dairy brands catering to both consumer and foodservice channels in New Zealand, including household names such as Mainland, Anchor and Kāpiti, known for their range of milk, butter, speciality cheese and yogurt products. All three brands will continue to source their milk from local New Zealand farmers, ensuring continuity in quality and provenance. In Australia, Fonterra's operations encompass a similar array of dairy products under the Fonterra Australia umbrella, featuring brands like Mainland, Western Star, Perfect Italiano and Australian Dairies. The merger is expected to streamline operations while maintaining the integrity of Fonterra's product offerings across both markets. René Dedoncker, current managing director of Fonterra Australia, has been appointed to lead the newly formed Fonterra Oceania unit. In the statement, Hurrell wrote: "Some of you may know René given his extensive experience across the Co-op, having held several global leadership positions before taking the reins of the Australian business in 2017". Fonterra's decision to consolidate its New Zealand and Australia businesses follows the co-op's Q1 full-year 2024 financial results, which saw a 12% decline in revenue compared to the previous year, amidst challenges in sales volume. However, gross profit and EBIT experienced notable increases, reflecting the company's resilience in navigating market headwinds. Furthermore, Fonterra has reaffirmed its commitment to sustainability, recently announcing ambitious emissions targets aimed at reducing farm-based emissions by 30% by 2030. This strategic focus aligns with the company's broader mission of fostering environmental stewardship and sustainable dairy practices.

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