Fonterra sets new production record

Media Release
7 June 2006

Fonterra sets new production record

A strong finish to the season has seen Fonterra suppliers set a new production record for the just-completed 2005/2006 dairy year.

In the year to 31 May 2006, Fonterra collected and processed more than 14 billion litres of milk, including 68.5 million litres on 2 November 2005, the Peak Day. This equates to 1.21 billion kilograms of milksolids, 4.3 percent up on last season’s production, and 0.6 percent ahead of the previous record, set in the 2003/2004 season.

Director Fonterra Milk Supply Barry Harris said after a good start to the season a cold and wet September and October had meant peak flows were less than expected, but an excellent autumn had more than made up for that.

With a record 94 new suppliers set to join the co-operative this year, confidence in the prospects for Fonterra and the dairy industry was high, Mr Harris said.

Fonterra Ingredients Managing Director John Shaskey said the high Autumn milkflows had been anticipated. The extra milk was already committed to customers and would be shipped over the next two months. April and May had been record months for Ingredients sales and he was confident this momentum could be maintained despite an extremely competitive trading environment.

“The work we have done to simplify and strengthen our business model, including supply chain efficiencies, is really starting to pay off, and we will be building on that in the new season,” he said.

Mr Shaskey said Fonterra needed to continue its drive to excel in both its commodity and specialty ingredients businesses.

“Overall, it seems likely a more favourable exchange rate will help to balance the fact that commodity prices are coming off the historical highs of the past 12 months. But the market conditions forecast for 2006/07 mean we can expect an even tougher trading environment this season and we will have to work very hard in the coming year to ensure we continue to get the best possible returns for our shareholders and for the New Zealand economy as a whole.”

ENDS

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