New Zealand dairy giant Fonterra has blamed economic conditions for its decision to wipe NZD92m (US$56.8m) off the valuation of its domestic consumer business.

And it has pointed to similar pressures for its need to downgrade the value of its Asia brands Anlene, Chesdale and Anmum by NZD70m.

In commentary accompanying the release of its 2023 interim results today (16 March), CEO Miles Hurrell said: “Our domestic consumer business, Fonterra Brands New Zealand (FBNZ), has been under margin pressure for some time and is not improving as fast as planned. Performance of our Asia consumer brands has been impacted by weakening currency in the markets they operate, higher interest rates and a declining economic environment in some south-east Asian markets.

“For these reasons, we have revised down the valuation of FBNZ by $92m and our Asia consumer brands Anlene, Chesdale and Anmum by $70m.”

Post-revision, FBNZ is valued at NZD669m and the three Asia brands at NZD272m.

The co-op, the world’s largest dairy exporter, provided further detail of the economic conditions influencing its decision in its 2023 interim report document for investors.

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It said: “Our domestic consumer business has experienced challenging market conditions including higher input costs and inflationary pressures.

“The New Zealand dairy market is highly competitive and this has impacted the sales team’s ability to fully recover those higher input costs through product price increases.

“Additionally, rising interest rates have also put pressure on our New Zealand consumer business. This has resulted in a NZD92m goodwill impairment of the business.”

Turning to its Asia brands, it said the NZD70m write-down split is NZD45m for milk powder brand Anlene, NZD23m for baby-formula brand Anmum and NZD2m for processed cheese brand Chesdale.

It said the downgrade was partly “due to a reduction in forecast sales growth for Anlene and Anmum and changes in discount rates and foreign exchange rates to all three brands”.

Fonterra’s delivered a half-year profit after tax of NZD$546m, up $182m on the year before’s results. Revenue was NZD13.24bn for the six months to 31 January 2023 compared to NZD10.79bn for the corresponding period in 2022.

Hurrell said: “Our co-op’s scale and diversification across channels and markets has enabled us to navigate through disruption and make the most of favourable market conditions in a number of areas.

“While milk powder prices have softened recently, impacting our forecast farmgate milk price range, protein prices have been high, and this is reflected in the lift in earnings we’re reporting today.”

In December, Fonterra sold off its Chile unit Soprole for $641m.