Fonterra Cooperative Group has sought to reassure shareholders after its Chinese partner Beingmate Baby and Child Food Co slashed its full-year guidance.
Shenzen-listed Beingmate now expects to report a full-year net loss of 750 million yuan to 800 million yuan, double its prior forecast loss, according to Reuters. In the prior year, the company reported a net profit of 103.6 million yuan.
“We are confident in our overall China strategy, of which our Beingmate partnership continues to be an important part,” said Fonterra’s chief financial officer Lukas Paravicini in an emailed statement after Beingmate’s announcement. Fonterra bought an 18.8 percent stake in Beingmate in 2015 as it sought to ensure greater access to the Chinese market.
“Beingmate’s recent performance reflects China’s market conditions, which remain challenging for all dairy players. The long-term outlook remains strong,” said Paravicini. He said distribution of Fonterra’s Anmum infant formula brand in China grew from 60 cities in 2015 to more than 170 cities and total sales are ahead of projection.