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Co-Op’s Momentum Continues to Deliver Value

25 September 2017

Co-Op’s Momentum Continues to Deliver Value to Shareholders through Considerable Lift in Total Returns

Fonterra Shareholders’ Council Chairman, Duncan Coull said that despite the higher FY17 season Milk Price the Fonterra business pushed hard to deliver a solid return and in doing so built on the momentum of the past twelve months and provided confidence that the strategy was delivering on its ambitions.

Mr Coull: “After a couple of lean years the final payout of $6.52 for a fully shared-up Farmer including a 40 cent dividend is one we can be satisfied with.

“It is encouraging that Fonterra, despite the higher input costs associated with a rise in the Milk Price, was able to drive sufficient value and capture the required efficiency gains, with a continued focus on strong financial discipline, to enable a strong dividend payment while maintaining a healthy balance sheet.

“Of note was the strong performance of the Consumer and Foodservice business which increased its volumes by 576 million liquid milk equivalents from FY16 and continues to go from strength to strength.

“This exemplifies both the ‘Turning the Wheel’ strategy in action and the favourable position our Co-op has worked itself into in the Consumer and Foodservice space – the Council looks forward to seeing this momentum continue.”

Mr Coull also spoke to the continued improvement in the Australian business.

“Council commends Management for the continued turnaround in the Australian business which, on the back of a sound strategy including a 22 per cent reduction in overheads from FY15, is now delivering strong, stable earnings.”

Mr Coull also noted the understandable interest from Farmers in regards to their Co-operative’s significant investment in Beingmate.

“Council is concerned with the recent events as relate to Beingmate and disappointed with the returns,however both the Board and Management have been consistent in their view that the implementation of new regulations in the Chinese market in January 2018 should signal the beginning of a turnaround in this investment relative to the wider China strategy.

“Council is maintaining a watching brief and having regular discussions with the Board on this topic. We look forward to reporting on this in detail in our Annual Report.”

Mr Coull said the Council is currently reviewing the Co-op’s FY17 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 October.


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