CCM: Beingmate makes business layout overseas for milk sources 03-10-2016

On 4 February, Beingmate announced the final agreement signed with Fonterra, to acquire 51% of shares in Fonterra’s Darnum plant. This is a move for Beingmate to make foreign business layout to build its quality milk sources and further strengthen its competitiveness.

 

On 4 February, Beingmate Baby & Child Food Co., Ltd. (Beingmate, stock code: 2570) announced the signing of its final agreement with Fonterra, to acquire 51% of its Darnum (Australia) plant for USD58.3 million (AUD82.0 million, AUD1.00=USD0.7111 on 17 February, sourced on hexun.com), creating an unincorporated JV to run the plant. Beingmate (Australia) PTY Ltd. has been set up, although the agreement still needs the approval of the government departments in both China and Australia.


This acquisition was initially established by the 2 sides in 2014. Specifically, their partnership involved:

·            Fonterra to acquire up to 20% of stake in Beingmate

·            Beingmate to distribute the Anmum range on an exclusive basis

·            Fonterra and Beingmate to build a JV to run the Darnum plant


Darnum represents a total investment of USD213.2 million (AUD300 million) and acts as Fonterra’s global centre for nutritionals. In 2015, the 2 companies finished testing of specially made infant formula in the plant.




In 2014, Beingmate refocused from infant formula to "baby & children's food”, rebranding from Beingmate Science and Technology Industry Trade Co., Ltd. to Beingmate Baby & Child Food Co., Ltd. In addition, it divested its non-food business off and launched new products. However, its infant formula business - 93.5% of its sales mix - continued to suffer. In this context it began strategic cooperation with Fonterra. The overall macro-economic downturn, slowdown in domestic demand, stocks clearance and subsequent price competition and increasing imports of infant formula have all combined to threaten the domestic formula businesses such as Beingmate.


The acquisition of Darnum gives it access to obtain Australian dairy ingredients and infant formula in original packing, helping it internationalise and improve its financial performance. “In the last 2 years, we have been expanding at home and abroad, to get quality milk sources, improve our product quality and enhance our R&D capability. All of this will show results in the near future,” said Beingmate.


Notably, in January the company predicted its full-year 2015 figures, saying that its net profit will rise by 45-60% YoY to USD15.2-16.8million (RMB99.9-110.2 million). This is already a good start.


The Australia deal gives it the rights to half of Darnum's annual 50,000 tonnes output. Currently Beingmate manufactures infant formula at its main two plants of Anda (Heilongjiang Province) and Tangqi (Hangzhou City, Zhejiang Province) and the much smaller Beihai site (Guangxi Zhuang Autonomous Region). Its formula output rose to close to 60,000 tonnes in 2013 but has since dropped back significantly. The impact of the Darnum volume on the company's domestic manufacturing configuration remains to be seen.

 

Beingmate signs MOU with Fonterra, 27 August, 2015


Source: Baidu.com

 



About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta.

 

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Tag: Beingmate, Fonterra

 

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