Council Welcomes Stronger Balance Sheet

MEDIA RELEASE

24 March 2010

Shareholders’ Council Welcomes Stronger Balance Sheet

Fonterra Shareholders’ Council chairman Blue Read says it is extremely satisfying to see a strengthening of the co-operative’s balance sheet.

Mr Read was welcoming the announcement today of the co-operative group’s interim financial results, which show Fonterra Co-operative Group Limited’s debt gearing as at 31 January 2010 strengthened to 53.3 per cent, down from 61.5 per cent at the same time a year earlier.

“The bolstering of the balance sheet includes the positive impact from $263 million that was raised from shareholders in January, following the first two stages of a capital restructuring of our cooperative that was approved by shareholders in 2009,” he said.

Mr Read said the improvement in the group’s balance sheet helps the co-operative manage continued volatility in international prices and uncertain world markets.

“It is heartening to see in uncertain times that our co-operative’s forecast Milk Price for the 2009/10 season has been maintained at the $5.70 per kgMS announced in December 2009,” Mr Read added.

The co-operative also announced today an interim dividend of 8.0 cents per share will be paid on 20 April 2010, while the full-year dividend forecast has been maintained at 20-30 cents per share. The interim dividend is in line with the prior-year’s value-added return. In addition, the co-operative has reiterated its forecast that 10-30 cents per share of distributable profits will be retained for the full year.

Mr Read said: “I believe these interim results show our co-operative has more flexibility to react to market volatility and this sort of outcome is encouraging.”

He noted the Shareholders’ Council is continuing discussions with the co-operative’s Board about further capital structure change.

“Council and the Board agree we need to address Fonterra’s capital structure and that the business will benefit from having a more stable capital base,” Mr Read said. “As representatives of shareholders we want to make sure that every Fonterra farmer has a good understanding of possible consequences of any change,” Mr Read said.

About the Fonterra Shareholders’ Council

The Fonterra Shareholders’ Council represents the interests of Fonterra farmers to the Board of the co-operative and plays an active role in monitoring and assessing the governance and performance of Fonterra. There are 35 Councillors who are all shareholders elected by their fellow farmers in wards across New Zealand.

ENDS

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