* Company warns of margin pressure in second half
* Reaffirms full-year earnings forecast (New throughout, adds details on China reorganisation, analyst comment)
March 17 (Reuters) - New Zealand’s Fonterra said on Wednesday it will sell its joint venture farms in China and its remaining stake in infant formula maker Beingmate as it looks to move its focus from Beijing and prioritise domestic operations.
Fonterra also posted half-year results, with a 43% surge in adjusted profit due to robust demand from China and firmer global dairy prices.
The world’s biggest dairy exporter has been shifting its focus back home since 2019, when it halted an ambitious overseas expansion plan that drew sharp criticism from the 10,000 plus farmers who make up its cooperative.
The company began selling down its stake in Beingmate that year. It said on Wednesday its shareholding stood at 2.82%, and would be completely sold off before the current financial year ends.
Chief Executive Miles Hurrell said Greater China remains one of the company’s most important strategic markets.
“I think it is being seen as totally in line with what their strategy has been under Hurrell, and that’s what farmers have been wanting as well,” said Dave Schaper, an investment advisor with Forsyth Barr.
“They have really concentrated down on the core business so the divestment makes sense.”
Fonterra owns a farming hub in China’s Shandong province along with its joint venture partner, Abbott Laboratories .
Normalised profit after tax was NZ$418 million ($300.5 million) for the six months ended Jan. 31, up from NZ$293 million a year earlier, as earnings before interest and tax from Greater China rose 38%.
The company warned rising raw milk prices will pressure sales margins. Global dairy prices have surged more than 36% from mid-June last year.
Fonterra declared an interim dividend of 5 New Zealand cents per share, and reiterated its full-year forecast for normalised earnings of between 25 and 35 New Zealand cents per share.
$1 = 1.3761 New Zealand dollars Reporting by Soumyajit Saha and Shashwat Awasthi in Bengaluru; Editing by Shinjini Ganguli, Sriraj Kalluvila and David Gregorio