Harvey Norman is getting out of the Australian dairy industry, as a Victorian dairy farm it part-owns is put up for sale.
The dairy venture part-owned by Harvey Norman has been put up for sale, three years after the furniture and electrical retailer bought into it on the recommendation of founder and chairman Gerry Harvey.
The real estate agency running the intended sale, Elders Real Estate, said on Monday it is calling for expressions of interest in Coomboona Dairies in northern Victoria’s Goulburn Valley.
Harvey Norman, controlled by billionaire retail veteran Mr Harvey, hired receivers for the dairy farm in March, a month after saying writedowns on the farm had contributed to a decline in first-half profit.
Harvey Norman’s first-half profit dropped 19 per cent to $207.7 million, which included a $20.7 million impairment on a dairy investment that attracted the ire of shareholders and confusion from analysts.
The disappointing first-half result triggered a major share sell-off on February 28, wiping $635 million from the retailer’s market value.
Harvey Norman paid $34 million for a 49.9 per cent stake in Coomboona in September 2015, but gave no reason for its interest in its notice to the Australian stock exchange.
At the time, Mr Harvey told The Australian newspaper that the investment reflected the tough times in the local retail sector.
One analyst said the investment was small, but odd.
The farm – which is being offered as a whole or as two holdings – produces more than 30 million litres of milk annually from about 2,500 Holstein cows.
Elders anticipates significant interest from both private and institutional investors.
By: Lilly Vitorovich