Fonterra has declined to be drawn on speculation that its icecream company Tip Top may be up for sale as the co-operative looks to streamline its operation and reduce its debt.

The Australian newspaper this week said Fonterra is believed to be weighing up a sale of its South American operations, as well as Tip Top, amid a strategic review aimed at boosting its returns.

The paper said investment bank Macquarie Capital has been hired to sell Tip Top, thought to be worth about $400 million.

Goldman Sachs, the bank typically used by Fonterra, is likely to be behind the sale of the South American operation, which could reap the dairy co-operative $1 billion, it said.

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In an emailed reply to a request for comment from the Herald, a spokesman said it was natural for people to speculate on what Fonterra might do as it does a stock take of its portfolio.

"We are taking a close look at our current portfolio, including all of the co-operative's investments, major assets and partnerships against our strategy," he said.

"This includes a targeted return on capital and whether there is opportunity to scale them up and grow more value over the next two-three years. This process is well under way," he said.

"Naturally, people will speculate on what all this could mean," he said.

"When we are ready, we'll be open with our people, farmers and the market about any changes."

Tip Top, the country's biggest icecream maker, rates as a mid-sized enterprise in the so called fast moving consumer goods (FMCG) market.

In terms of profile, Tip Top is the envy of the marketing world, with high brand awareness among New Zealanders.

Tip Top has had a bewildering number of masters over the decades since it started off as an icecream parlour in Wellington in 1936.

By 1962, the company's Mt Wellington plant had become the Southern Hemisphere's biggest icecream factory. Two years later, Tip Top had expanded and a parent company — General Foods — was formed.

The company went to Goodman Fielder in 1987, Heinz in 1992, West Australia's Peters and Brownes in 1997, Kiwi Dairy Co in 2000 and finally to the current owner, Fonterra, in 2001.

In South America, Fonterra has substantial assets in the form of its subsidiary Soprole in Chile, and is a significant player in Brazil.

Soprole is Fonterra's oldest overseas investment and one of its most important, representing more than 25 years of Kiwi involvement in that part of the world.

Fonterra's strategic review emanates from its 2017/18 net loss of — $196m — the first in its history.

The co-operative's gearing ratio was up from 44.3 per cent last year to 48.4 per cent — beyond the company's own comfort levels of 40 to 45 per cent.

Included in the review is Fonterra's 18.8 per cent holding in China's Beingmate.

Fonterra's NZX-listed units last traded at $4.81, down $1.50 or 24 per cent over the last 12 months.