Fonterra needs to keep dumping assets, irrespective of performance, if they don't add to the cooperative's core business, Jarden said.
While the business had made a "solid start' on a new strategy to reverse recent poor performance and disastrous international investments under its new chief executive Miles Hurrell, "a path to higher sustainable earnings remains uncertain," Arie Dekker, head of Jarden's equity research team, said in a client note.
Dekker's advocacy of a slimmed-down Fonterra focused on its farmer-shareholders' needs has been matched by the cooperative since the departure in 2018 of its chief executive of the previous eight years, Theo Spierings.
"The co-op needs to be in a position that is "sustainable with what supplying farmers want from it."
"Performance and competitiveness should trump breadth of activity," Dekker said, in part because the risk of Fonterra farmer-shareholders defecting to supply a competitor is "too high".