Fonterra is to offload its yoghurt and dairy desserts business in Australia to Parmalat, the Italy-based group owned by France’s Lactalis.

Financial details were not disclosed and the New Zealand dairy giant described the sale as “not material”.

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However, Fonterra explained the disposal was part of a strategy to return its Australian operations to “strong and sustainable profitability”.

“We are focusing on areas where we can win in a highly competitive market, and that means optimising our product mix and streamlining operations to match, and investing in higher value add products that will deliver the best returns for our farmer shareholders and unit holders,” CEO Theo Spierings said.

“Our Australian operations have particular ingredient strengths in cheese, whey and nutritionals, complemented by our strong consumer and foodservice businesses.”

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The deal includes manufacturing plants in Tamar Valley and Echuca. It also takes in brands including Tamar Valley.

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Judith Swales, the MD of Fonterra’s Oceania unit, said the sale was a way to “lock in” the company’s “competitive position in the Australian consumer market”.

“We will continue investing in programmes and innovation that supports our market-leading brands in key retail categories, including Western Star butter and Perfect Italiano, Mainland and Bega cheeses, Anchor cream, and fresh milk,” she said.

Fonterra said all of its employees working in the yoghurt and dairy dessert business at Tamar Valley and Echuca have received offers of employment from Parmalat.