Ann: CREDIT: FCG: Fonterra responds to Standard and Poor's

• Release Date: 14/10/15 15:39
• Summary: CREDIT: FCG: Fonterra responds to Standard and Poor's
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					FCG
14/10/2015 15:39
CREDIT
PRICE SENSITIVE
REL: 1539 HRS Fonterra Co-operative Group Limited

CREDIT: FCG: Fonterra responds to Standard and Poor's

14 OCTOBER 2015

Fonterra responds to Standard and Poor's

Fonterra Co-operative Group Limited has been notified today that rating
agency Standard and Poor's has downgraded the Co-operative's credit rating
from A to A-.

Chief Financial Officer Lukas Paravicini said: "Our underlying financial
strength and credit quality remain strong. This is recognised by Standard and
Poor's maintaining our rating in the 'A' category and reflects our
fundamental strength and financial discipline.

"It is important to note that the revised rating will not have any impact on
Fonterra's strategy or on farmer shareholder payout."

Mr Paravicini said the Co-operative's current debt is at expected levels for
this stage of the investment cycle.

"We carefully planned our investment strategy by first reducing our gearing
over a number of years to enable us to make higher levels of investment in
key strategic opportunities.

"These investments are making the Co-operative stronger and positioning us
well for the future. We have built additional manufacturing capacity in our
home base of New Zealand which is improving returns by giving more product
options during the peak production period and our planned investments in
China are building our presence in our number one strategic market," Mr
Paravicini said.

Fonterra is also continuing its strong financial discipline including capital
investment management, setting a prudent advance rate payment to farmers for
the current season, and applying its dividend policy to ensure an ongoing
retention of a portion of earnings.

"In addition we are progressing well with our business transformation and
this will further strengthen our financial position.  Global dairy prices are
also recovering which is a positive development, particularly for our farmer
shareholders," Mr Paravicini said.

Standard and Poor's noted that its new methodology for agricultural
co-operatives introduced in March does not always adequately capture the
significant financial flexibility, and hence strength, of the Co-operative.

"Given this, we are disappointed that Standard and Poor's has not reconfirmed
its rating from April, especially when global dairy prices have significantly
improved and we have continued our strong financial discipline," Mr
Paravicini said.

-ENDS-

For further information contact:
Simon Till
Director Capital Markets
Phone: +64 21 777 807
End CA:00271746 For:FCG    Type:CREDIT     Time:2015-10-14 15:39:28