Australian dairy company Bonlac Foods has been forced to sell off more of its assets to make up for losses from currency hedging contracts in 2002-03.
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The company recorded losses of A$70m (US$39.1m) during 2001-02 from hedging contracts that were put in place in the late 1990s during the Asian crisis and are due to expire in late 2004. Bonlac managing director Peter Myers has said he expects the losses from hedging contracts to be around $35m for the current financial year if the Australian dollar stays around the level of US 56 cents. If the value of the Australian dollar moves above US 60 cents then the losses would subside.
The main asset Bonlac is putting up for sale is its Recaldent tooth remineralising product division, which has annual sales of $10-12m. Two other non-core businesses have also been put up for sale, reported the Australian Financial Review.
Bonlac, in which New Zealand dairy giant Fonterra owns a 25% stake, has also announced that it has had to recruit 70 extra suppliers to boost its milk flow. The company said that without the extra suppliers, milk flow would be down 4% from the previous year.
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