Ann: FORECAST: FSF: FONTERRA UPDATES FY13 FORECAS

• Release Date: 25/07/13 10:54
• Summary: FORECAST: FSF: FONTERRA UPDATES FY13 FORECAST
• Price Sensitive: No
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FSF
25/07/2013 08:54
FORECAST

REL: 0854 HRS Fonterra Shareholders' Fund (NS)

FORECAST: FSF: FONTERRA UPDATES FY13 FORECAST

Fonterra Co-operative Group Limited today announced that its EBIT for the
FY13 financial year ending 31 July 2013 will be lower than the forecast
reported EBIT in the Fonterra Shareholders' Fund Prospectus, issued last
year.

The Co-operative confirmed that the FY13 Forecast Cash Payout to Farmer
Shareholders of $6.12 remains unchanged.  In addition, the current earnings
per share[1] guidance range of 45 - 50 cents per share has been reconfirmed;
although it is now likely to be at the lower end of this range.  The
prospective FY13 annual dividend per share of 32 cents remains the same.

Fonterra Chief Executive Theo Spierings said that although the financial year
had not yet ended, the impact on EBIT of unprecedented volatility caused by
the extreme drought in New Zealand earlier this year, and the acceleration of
the reshaping of Fonterra's Australian business, was sufficiently clear for
the Co-operative to provide an update today.

"In the first half of FY13 NZ Milk Products' (NZMP) delivered a strong
performance on the back of price premiums, product mix, cost savings and
productivity gains.  At the time of our interim result on 27 March 2013, we
cautioned that the second half was likely to be more challenging.

"The drought has contributed to a 64 per cent rise in Whole Milk Powder
prices on GlobalDairyTrade since early 2013, and this has had a temporary,
but significant, negative impact on NZMP's margins.

"At the same time, our Australian business remains under pressure.  Although
a recovery plan is being implemented, it is in its early stages and will not
counteract the impact on earnings of intense competition and the accelerated
reshaping of our business.  The reshape programme has resulted in a number of
additional write-offs," said Mr Spierings.

"The combined impact of the drought and the reshaping programme in Australia
means Fonterra's forecast normalised EBIT[2] for FY13 is likely to be around
$1 billion, which is below the prospective normalised EBIT of $1.079 billion
stated in the Fonterra Shareholders' Fund Prospectus.  This revised figure is
subject to continued volatility in dairy prices, foreign exchange and other
market uncertainties that might occur in the final month of FY13.

"While the revised normalised EBIT guidance is below the Prospectus forecast,
lower interest and tax mean that our earnings per share forecast range of 45
- 50 cents per share remains unchanged," said Mr Spierings.

Fonterra will provide a full update of its FY13 result on 25 September 2013.

A statement on Fonterra's FY14 Forecast Cash Payout expectations (Farmgate
Milk Price and dividend per share) will be made following its scheduled Board
meeting next week.

1. Earnings per share taking into account normalisation adjustments to EBIT
2. Earnings before interest, tax and other non-recurring items
End CA:00238950 For:FSF    Type:FORECAST   Time:2013-07-25 08:54:43