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Strong 2015/16 Profit Result for Fonterra

22 September 2016

STRONG 2015/16 PROFIT RESULT FOR FONTERRA,
ENCOURAGING MILK PRICE SIGNALS AHEAD FOR FONTERRA FARMERS
Fonterra Shareholders’ Council Chairman, Duncan Coull, said Fonterra’s recording of its highest ever EBIT, which resulted in Fonterra Farmers receiving a 60% increase on the earning per share received last season, was a positive result in an otherwise challenging environment.

Mr Coull: “The final payout of $4.30 for a fully shared-up Farmer is reflective of the very tough season we have endured.

“However, it is encouraging to see that Fonterra, assisted by the low Milk Price environment, has further driven volume into value and captured efficiency gains which have cumulated into a strong dividend while also serving to strengthen our Co-operative’s balance sheet.

“It was also pleasing to see Fonterra driving more income from value-add products and that most parts of the business operated at a high level over both halves of the year especially the Ingredients and the Consumer and Foodservice businesses, the solid returns from which helped drive the $1.358 billion EBIT and $834 million net profit.

“While some parts of the business such as international farming were not left unscathed by the on-going low global milk prices it was encouraging to see the beginnings of a turnaround in the Australian business especially given the assurances we received last year from our Board and management that a strategy was in place to give effect to this. “The Council has also noted a desire from Farmers to see financial information from their Board regarding our Co-operative’s investment in Beingmate relative to the wider China strategy. The Council is pleased to note that the Board and management have recently discussed this with us and we look forward to reporting on this in detail in our Annual Report.”

Mr Coull said Farmers would take some comfort in yesterday’s announcement of a 50 cent increase in the forecast 2015/16 Milk Price to $5.25 per kg/MS (which on top of a forecast earnings per share range of 50-60 cents equates to a $5.75 -$5.85 total payout available for a fully shared-up Farmer).

“The lift in the Milk Price, particularly the increase in the advance rate to $3.60, will provide some relief to our Farmers and along with signs that our Co-op’s strategy is delivering strong returns, will enable them to move forward with greater confidence.”

Mr Coull said the Council is currently reviewing the Co-op’s 2015/16 annual results figures as part of its monitoring role and will provide detailed analysis and commentary in its Annual Report to Farmers which will be available in early November.

ENDS

ABOUT THE FONTERRA SHAREHOLDERS’ COUNCIL

The Fonterra Shareholders’ Council represents the interests and views of Fonterra Farmers to the Board of the Co-operative and plays an active role in monitoring the performance of Fonterra. There are 35 Councillors, all Fonterra Farmers, who have been elected by their fellow Shareholders in 35 wards across New Zealand.

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