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Fonterra Payout Forecast For 2002/3

Monday 29 April 2002

Fonterra Co-operative Group Ltd is advising shareholders that its forecast of the most likely final payout for the 2002/3 season is now NZ$4.00 per kilogram of milksolids.

This is down from an initial forecast of NZ$4.50/kgms advised in February. In a letter to shareholders, Fonterra Chairman John Roadley said the causes were falling commodity prices and a strengthened New Zealand dollar.

Fonterra has been reporting negative market sentiments since the middle of last year and the events of 11 September have added to the uncertainty. In November, the EU began to re-introduce export subsidies and has continued to regularly increase these. The US has also disposed of a significant quantity of milkpowder with similarly increasing subsidies.

Since February, market prices have continued to fall at a rate not previously experienced. Commodity prices are now close to their lowest levels in twenty years although a NZ$4.00/kgms payout would still be among the highest in recent years.

Fonterra's hedging portfolio will limit the impact of a strengthened New Zealand dollar to about NZ$0.10/kgms, Mr Roadley told shareholders.

The forecast of the most likely final payout for the 2001/2 season, which ends on 31 May, continues to be NZ$5.30/kgms, less three cents for industry good activities.

END

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