Fonterra’s spot of luck

In today’s Dominion Post:

The melamine in the milk scandal has had a silver lining for Fonterra in the form of a big jump in revenue from Asia.

In its half-year result, revenue from Asia, Africa and the Middle East was up 53 per cent to $1.2 billion. Chief executive Andrew Ferrier said increased ingredients sales to China was a major factor.

After the crisis became public in September, Chinese dairy companies started buying milk from overseas rather than sourcing it locally, he said.

That was the largest of three drivers of the increase in Asian revenues.

SanLu the Chinese dairy company that was 43 per cent owned by Fonterra was at the centre of the scandal, in which six babies died and more than 200,000 became ill.

The melamine crisis was also partly responsible for a switch to more expensive foreign dairy products by consumers in Asia, which enabled Fonterra to drive higher revenues, Mr Ferrier said.

Gains from the falling kiwi dollar was the third factor.

How can anyone report without a hint of outrage? So Fonterra’s sloppy, or possibly negligent, business practices in China kill or threaten the lives of many babies and the happy result is improved revenue for Fonterra.  That’s the invisible hand of the market handing out morality lessons for us all again I guess.

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