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Fonterra On Track To Deliver Merger Business Case

Fonterra CEO Craig Norgate says the company is on track to deliver the Business Case supporting last year's dairy industry merger.

He told the American Chamber of Commerce in New Zealand today that Fonterra had an absolute obligation to deliver on the Business Case, which outlined cost savings, revenue enhancements and strategy gains worth over NZ$300 million by the third full year after the merger.

"Everything we do to deliver on the Business Case is being measured in fine detail and we have an obligation to transparently report on it. Right now, we continue to be on track and our challenge is to demonstrate to shareholders that we have delivered the $300 million into their pockets."

Mr Norgate said he was pleased with the company's operational performance during its integration process, saying it had not suffered from the customer-retention problems, operational problems or defections of key people that are typical in many mergers.

It had met the challenge of record milk production, record peak production through the spring, and the expansion of manufacturing capacity at Clandeboye, Stirling, Tirau and Hautapu.

"In the market, despite the downturn on prices, we are confident we are on track to deliver a record payout to our supplying shareholders." The current payout forecast is NZ$5.40 per kilogram of milk solids, eight percent up on last year.

Mr Norgate also committed himself and Fonterra to be advocates for a Closer Economic Relationship with the United States.

"There are very real benefits to the United States from an agreement with New Zealand," he said. "The key benefit is that we represent low-hanging fruit as they seek to achieve wider trade liberalisation goals in the interests of prosperity and security. With New Zealand - and with Australia - it has the opportunity to complete a model deal, one that would increase the momentum for further economic liberalisation in the Asia Pacific region."


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