Fonterra responds to Beingmate forecast earnings downgrade

,
22 January 2018

FONTERRA RESPONDS TO BEINGMATE’S FORECAST EARNINGS DOWNGRADE
Last night, Beingmate Baby & Child Food Co Ltd (Beingmate) issued a forecast earnings downgrade
for its financial year ended 31 December 2017, revising the previously announced forecast loss of
RMB 350 million – RMB 500 million to a forecast loss of RMB 800 million – RMB 1 billion (NZ$171 –
NZ$214 million).

As an investor in Beingmate (18.8 per cent shareholding), we are extremely disappointed by this
announcement and the on-going performance of the company. We are seeking more information on
the forecast downgrade in addition to receiving Beingmate’s full year financial statements. We will
consider the financial implications on our investment for the purposes of our upcoming interim financial
results.

We are also aware that as part of this announcement, four Beingmate directors, including the two
directors designated by Fonterra, have expressed reservations relating to some aspects of
Beingmate’s financial management and reporting practices.

We have total confidence in the judgement of our designated directors (Johan Priem and Christina
Zhu) and that their actions are in the best interests of Beingmate and all of its shareholders. We are
concerned about the reservations they have expressed and are seeking clarification on the matters of
concern.

Despite Beingmate’s recent performance, the strategic rationale for our broader partnership with
Beingmate still stands. We are disappointed that Beingmate is not maximising the opportunity created
by the early registration of its 51 formulations under the new registration rules. The Chinese market is
growing rapidly and within five years, forecast demand for infant and baby dairy products will be more
than the total for other global markets, so the potential remains.

China is one of Fonterra’s largest global markets, accounting for NZ$3.4 billion of our sales revenue
and a normalised earnings contribution of greater than NZ$200 million in FY17. Our business in China
has been enabled by our integrated strategy, comprising of Ingredients, Consumer and Foodservice,
our China farms and our Beingmate partnership.

ENDS

For further information contact:
Campbell Hodgetts
Fonterra Communications
Phone: +64 27 563 4985

24-hour media line
Phone: +64 21 507 072

About Fonterra
We’re a global dairy nutrition company owned by more than 10,000 farmers and their families. We’ve built our
expertise on the legacy of the thousands of farmers who’ve made New Zealand a world leader in dairy. With a

Fonterra Co-operative Group
Confidential to Fonterra Co-operative Group Page 2

can-do attitude and a collaborative spirit, we’re a world leading dairy exporter. Our 22,000 people share the
goodness of dairy nutrition with the world through our innovative consumer, foodservice and ingredient solutions
brands, and our farming and processing operations across four continents.

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