There is speculation that global dairy giant Fonterra Co-operative Group Limited (NZSE:FCG) may defer the initial public offering of its $1.2 billion Australian unit until 2023 due to market volatility and soaring milk costs. While delivering its half year result on Thursday, the company told the market that the average cost of milk had increased 30% on the previous year. And institutional investors in the Australian market have recently been wondering how a float will gain support in the current market for that reason.

Fonterra announced plans to potentially float its Australian unit in 2021. It hired investment banks Jarden and UBS for the listing. New Zealand-based Fonterra has also tapped PwC as an investigative accountant ahead of the listing.

Fonterra is also offloading its business in Chile. The dairy co-operative, which is responsible for about 30% of the world's exports, generated NZD 74 million ($69.3 million) of annual earnings before interest and tax from its Australian unit last year. The expectation has been that a float of the Australian arm would not happen until late 2022.

But now some believe it could be even later than that. While delivering its half-year result on March 17, 2022, Fonterra said it was continuing to make progress on the sale of its Chilean business as well as the ownership review of its Australian business. It said the Soprole dairy company in Chile and Fonterra Australia Pty Ltd. were performing well and its priority was to maximise the value of both businesses to the co-op.

It added that it would take its time to ensure the best outcomes from the processes. It remained confident about delivering on its intention to return around $1bn of capital to its shareholders and unitholders by the 2024 financial year.