New Zealand-based dairy co-operative Fonterra is planning to divest its ice cream brand Tip Top as part of its portfolio review.

With the divestiture of its ice cream brand, the company aims to reduce its debt levels by NZ$800m ($549m) by the end of this financial year.

Fonterra chairman John Monaghan said: “We are also looking at our ongoing ownership of Tip Top and have appointed FNZC as our external advisor to work with us as we consider a range of options. We want to see Tip Top remain a New Zealand based business and this is being factored into our options.

“While performing well, Tip Top is our only ice cream business and has reached maturity as an investment for us. To take it to its next phase successfully will require a level of investment beyond what we are willing to make.”

“While performing well, Tip Top is our only ice cream business and has reached maturity as an investment for us.”

The company also reached a provisional agreement with China-based infant formula manufacturer Beingmate in order to take back the complete ownership of the Darnum plant by the end of this month.

It also entered into a multi-year agreement, where Beingmate will purchase ingredients from Fonterra.

Monaghan further added: “Fonterra Brands New Zealand is one of the businesses that is starting to turn around. It’s early days but overall our consumer and foodservice business in Oceania delivered higher sales volumes and margins for Q1 compared the same period last year.

“We have set our capital expenditure (CAPEX) limit at $650m. While we are ahead on the same time last year, this was planned as we completed the final stages of projects from last year.”