New Zealand dairy giant Fonterra has announced it will take a significant write-down on the value of some of its assets, which will see the farmer owned-co-op report major financial losses this year. On Monday, Fonterra announced it would be writing down the value of several of its assets to the tune of €475m to €500m (NZ$820m to NZ$860m).

These significant write-downs will see the dairy co-op report losses of between €340m to €390m (NZ$590m to NZ$675m) this year, the co-op said. As a result, Fonterra told shareholders it will not be making a dividend payment to its farmer suppliers for the 2018/19 financial year just gone by.

Fonterra said the write downs are related to its Brazilian business DPA Brazil, its New Zealand consumer dairy business, its China Farms investment and its Australian Ingredients business.

Miles Hurrell, chief executive at Fonterra, said that after the strategic review carried out over the last year it became clear that Fonterra needed to reduce the carrying value of several of its assets.

“Since September 2018 we’ve been re-evaluating all investments, major assets and partnerships to ensure they still meet the co-op’s needs. We’ve taken a hard look at our end-to-end business, including selling and reviewing the future of a number of assets that are no longer core to our strategy. The review process has also identified a small number of assets that we believe are overvalued, based on the outlook for their expected future returns,” said Hurrell.

“While Fonterra’s underlying earnings for the 2019 financial year is within the current guidance of 10-15 cents per share, when you take into consideration these likely write-downs, we expect to make a reported loss of NZ$590m to NZ$675m (€340m to €390m) this year, which is a 37-42 cent loss per share,” he added.