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Fonterra; No Change In Opening Season Payout

02 September 2011

NEW ZEALAND - Fonterra has confirmed there was no change to its opening season forecast payout for 2011/12 of NZ$7.15 - $7.25 before retentions. This includes a forecast Milk Price of NZ$6.75/kgMS and forecast Distributable Profit range of 40 – 50 cents per share.

Under the Dairy Industry Restructuring Act (DIRA), Fonterra is required to publish an updated forecast Milk Price by early September.

Chairman Sir Henry van der Heyden said the Board had reconfirmed the forecast against a background of significant volatility in global markets and foreign exchange rates.

Sir Henry said the recent fall in food commodity prices was largely anticipated when Fonterra announced its opening forecast for 2011/12.

“In volatile economic and market conditions, we could face a range of factors that may affect the season’s Milk Price. But at this very early stage of the season we see no reason to alter the forecast,” Sir Henry said.

“We will continue to monitor possible slowing global economic growth that might translate into weaker dairy demand.”

Robin Barkla, Federated Farmers Dairy vice-chairperson, welcomed the announcement.

"After a hard winter and towards the end of calving, dairy farmers can now sit down and crack a smile. This will definitely give farmers and their families a boost as the new season's production starts to ramp up. It also continues a run of good numbers the cooperative has delivered," he said.

Chief Executive Andrew Ferrier said Fonterra had finalised its budget for the 2012 financial year. The forecast Distributable Profit range remains at NZ$570-$720 million, which would equate to a forecast range of 40-50 cents per share. Dividend payments are expected to be made in accordance with the Fonterra dividend policy to pay out 65-75 per cent of underlying profit (adjusted for one-off items and other factors).

For the previous 2010/11 season and financial year ended on 31 July 2011, Fonterra will announce its final Milk Price and Distributable Profit when it publishes its annual financial results in late September. The current 2010/11 payout forecast is NZ$8.00-$8.10 per kgMS before retentions (Milk Price of NZ$7.50 per kgMS and a Distributable Profit range of 50-60 cents per share).

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