Ann: FORECAST: FCG: Fonterra revises 2014/15 Forecast Milk Price

• Release Date: 10/12/14 08:32
• Summary: FORECAST: FCG: Fonterra revises 2014/15 Forecast Milk Price
• Price Sensitive: No
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					FCG
10/12/2014 08:32
FORECAST
PRICE SENSITIVE
REL: 0832 HRS Fonterra Co-operative Group Limited

FORECAST: FCG: Fonterra revises 2014/15 Forecast Milk Price

10 December 2014

FONTERRA REVISES 2014/15 FORECAST MILK PRICE

Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk
Price for the 2014/15 season from $5.30 per kgMS to $4.70 per kgMS.  When
combined with the previously announced estimated dividend range of 25-35
cents per share, this amounts to a forecast Cash Payout of $4.95 - $5.05 for
the current season.

Chairman John Wilson said that although farmers were expecting this lower
forecast, the revision will put pressure on their farming business budgets.

"There is still considerable volatility in global dairy markets," said Mr
Wilson.

"Right now we are seeing a number of factors that are delaying a sustained
return to higher global prices."

The global milk supply remains greater than demand, which has resulted in
GlobalDairyTrade prices for Whole Milk Powder falling 16.9 per cent since
late September, while Skim Milk Powder prices have fallen 7.7 per cent.

"Falling oil prices, geopolitical uncertainty in Russia and Ukraine, and
subdued demand from China as it continues to work through inventory are all
contributing to ongoing volatility and weak demand," Mr Wilson said.

"Today's revised forecast reflects the Board and management's best estimates
at this time. Given the uncertainty we are advising farmers to continue to be
cautious with budgeting and we will update them as the season progresses."

Chief Executive Theo Spierings said Fonterra was undertaking a targeted
programme to generate more cash to support farmers.

"Cash is important for our farmers and for our Co-operative," Mr Spierings
said.  "We will be further strengthening our tight controls on operating
expenditure, and will be driving harder on working capital, and deferring
capex - provided this does not slow progress on our V3 business strategy.

"This is a clear signal to farmers that we are all in this together.  We are
tightening our belts, just as they are."

The Board expects to look at the estimated dividend range at the time it
announces its Interim Result.

Fonterra is required to consider its forecast Farmgate Milk Price every
quarter as a condition of the Dairy Industry Restructuring Act (DIRA).

- ENDS -

Note: currency is New Zealand dollars unless otherwise stated.
End CA:00258702 For:FCG    Type:FORECAST   Time:2014-12-10 08:32:37