10 May 2012

MURRAY GOULBURN ANNOUNCES 12% REDUCTION IN ROLES TO SIGNIFICANTLY LOWER COSTS AND IMPROVE COMPETITIVENESS

Murray Goulburn Co-operative today commenced implementation of an organisation-wide change program following a detailed review of its processing sites and head office requirements. The review carefully examined current work flows and resource allocation and identified opportunities for significant productivity gains.

The company has informed staff of changes proposed across the business that impact roles at MG’s processing sites, distribution centres and head office. These changes will improve manufacturing efficiencies, reduce head office costs, and aim to increase MG’s global competitiveness and deliver higher farmgate prices.

Gary Helou, Managing Director, Murray Goulburn, said: “The change program embarked on by Murray Goulburn is even more critical given the recent significant decline in world market prices due to higher global milk supply. This initiative will help reduce the impact of falling world prices and a high Australian dollar on our supplier/shareholders.”

As a result of these changes MG’s total workforce is set to reduce by about 12% or 301 positions.

This includes: 74 roles previously removed through natural attrition (excluding changes at Rochester announced in March 2012); 168 roles mainly across MG processing sites and distribution centres, which will be made redundant by the end of June 2012; and, a further 59 head office roles, which will be made redundant by the end of September 2012. After the changes, MG’s total work force will comprise approximately 2,100 people employed mostly in rural and regional Australia.

All employees whose roles are made redundant will receive full entitlements. MG will also support staff with counselling and job transitioning services.

All MG processing sites remain open and the announced changes will not affect MG’s production. MG will continue to receive all the available milk from its suppliers and continue to supply its customers in the domestic and international markets.

“These are difficult but necessary decisions to ensure that Murray Goulburn can remain competitive. It is in the interests of our suppliers, shareholders, employees, communities and customers that MG remains a strong business into the future. We will continue to invest in programs and initiatives to significantly lower our operating costs, improve manufacturing efficiencies and strengthen our dairy foods portfolio,” Mr Helou said.

Mr Helou added the changes would make a significant contribution to Murray Goulburn’s goal of reducing operating costs by $100 million this year.

Murray Goulburn is Australia’s largest dairy foods processor and marketer and contributes an estimated $6 billion to the Australian economy.

Link to Press Release

MG Regional Head Office in Singapore

In a letter to shareholders Managing Director Gary Helou said that MG would open a Regional Head office in Singapore to oversee sales, marketing and distribution functions for MG in Southeast Asia.

Countries in the Southeast Asian region include Singapore, Hong Kong, Philippines, Thailand, Malaysia, Indonesia and Vietnam. The region represents 15% of world dairy trade with imports of approximately 1.8 million tonnes valued in excess of $6 billion per annum.

Mr Helou said Southeast Asia is categorised by rapidly growing populations and demand for dairy is growing as real incomes rise.

“The region’s local dairy production will not meet future demand growth and consequently these markets will continue to look to key exporting countries like Australia to meet future dairy food demand.

“The MG and Devondale brands already have a strong reputation in the region. The MG offices will improve the effectiveness of current market channels and grow markets for MG products,” Mr Helou said.

Mr Helou said MG will establish a regional office in Singapore to develop strong relationships with key customers and increase the marketing of the Devondale brand to consumers and customers. It will be led by experienced executives who will take charge of the mission to significantly expand our presence in this high growth dairy market.

The MG Singapore office will be MG’s third international office along with our team based in Tokyo, Japan and the recently announced Dubai office that will service the Middle East and North Africa.

MG Representative Office – Vietnam

Mr Helou also advised that MG will establish a Vietnam office to focus on sales growth in that market. Working as part of the Southeast Asia team, the Vietnam team will increase the profitability of MG’s sales into this market and drive long-term growth.

“Vietnam has a population in excess of 90 million people and is the world’s thirteenth most populist country. Dairy food consumption growth is forecast to be in excess of 10% p.a. and local milk supply will be insufficient to meet this growing demand,” Mr Helou said.

MG’s Vietnam office will represent the fourth international office for the company.

Link to Press Release

Murray Goulburn Co-operative announces third increase in farmgate milk price for 2011/12

Australia’s farmer-owned dairy food company, Murray Goulburn (MG), today advised the company’s dairy farmer – shareholders of a third increase in farmgate milk prices for the current season.

In his statement to shareholders, Managing Director Gary Helou advised of a price increase of $0.20 per kilogram of protein and $0.08 per kilogram of butterfat for milk supplied across the 2011/12 season.

“I am pleased to announce that this step-up takes MG’s price to $5.35 per kilogram milk solids which exceeds our recent end-of-year forecast of $5.30,” Mr Helou said.

“The price increase has been achieved through cost reductions and operational efficiencies, which have improved our margins despite a softening in world market prices and unfavourable foreign exchange conditions.”

Mr Helou said that MG continued to focus on implementing a change agenda that delivered Murray Goulburn a significantly lower cost base and higher levels of operational excellence.

“Whilst several key market factors are beyond our control, our cost base and operational efficiency is internal to the business and we intend to make significant savings to pass on to our suppliers in the form of higher milk prices.”

“We continue to strive for accelerated benefits of the change programme and as per usual will pass any benefits onto supplier / shareholders as soon as possible.” Mr Helou said.

In regards to next season, Mr Helou said that MG was currently completing the budget process for 2012/13 which would determine the opening milk price.

“The market outlook continues to soften in the face of increased international supply and a strong Australian dollar. We will focus on delivering internal efficiencies and lower operating costs to minimise the impact of lower international prices on our suppliers. We will keep supplier / shareholders updated in the lead up to our opening price announcements.”

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Media Release Farmgate Milk Price Increase April 2012

Murray Goulburn announces expansion of cream cheese production capacity and sales to key markets

MG today advised shareholders of two new initiatives that would grow Murray Goulburn’s market presence and improve shareholder returns.

In a letter to shareholders Managing Director Gary Helou said that MG would open an office in Dubai to service the world’s second largest dairy import market – Middle East and North Africa (MENA).

Countries in the MENA region include Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and Oman. Currently this region imports a combined 1.2 million tonnes of dairy which is valued at A$3.8 billion.

“MENA is categorised by a rapidly growing and affluent population with a strong cultural affinity to dairy products. Demand for food in the region will continue to grow and the region will look to key exporting countries like Australia to meet future dairy food demand,” Mr Helou said.

“Australian dairy currently has less than 10% share of this market. MG believes that strong relationships with customers and consumers is critical to expand its market presence in the MENA region.

Mr Helou said MG would immediately establish a strategic business unit based in Dubai to develop strong relationships with key customers and market the Devondale brand to consumers. It will be led by an experienced local business executive who will take charge of the mission to significantly expand our presence in this high growth dairy market.

The MG MENA office will be MG’s second international office along with a team based in Tokyo, Japan.

Cream Cheese Expansion

Mr Helou also advised shareholders of a strategic investment in expanding MG’s cream cheese production capacity in order to meet growth in market demand.

MG will invest $3.5 million to increase cream cheese production capacity at its Kiewa plant by 10,000 tons per annum. This additional capacity will be available to our markets by end of 2012.

“MG’s current cream cheese products have a leading market position in Japan based on their quality and consistency. The company also had recent success in developing profitable markets in other key international markets, including China and the Middle East,” Mr Helou said.

Mr Helou said that the investment in additional production capacity would allow MG to further grow its market share in the Japanese market and to significantly lift its cream cheese presence in Asia and the Middle East.

“These initiatives are focused on growth and rebalancing MG’s portfolio, in addition to pursuing MG’s stated target of $100 million in cost reduction. We are evaluating several initiatives to support the twin objectives of operational excellence and innovation, which will be announced as we complete their evaluation,” Mr Helou said.

Link to Press Release

23 March 2012

Flood assistance package for MG dairy farmers

While visiting Northern Victoria this week, MG Managing Director Gary Helou announced flood assistance support for MG suppliers severely impacted by the recent flood event.

“MG suppliers in the region north of Shepparton to the Murray River have been affected by local flooding and there are currently forty-two MG farms that have been assessed in the severely impacted category,” Mr Helou said.

“Unfortunately this is the second year in a row that MG has had to respond to this type of event with the severe floods between Rochester and Swan Hill and in Western Victoria in January 2011.”

Mr Helou said that MG’s response to this year’s flood event had been guided by the experience in the northwest last year – when shareholders were very appreciative of the MG response.

“Initially transport and field services have sought to support farmers through the immediate crisis. However, once the immediate flood passes we understand that cash flow, fodder and milk quality issues remain.”

Accordingly we have announced the following measures to directly assist those severely impacted farm businesses:
The early payment of part of the productivity incentive for FY12 (paid to all MG suppliers and bringing forward $16 million in payments)

• Assistance payments relating to milk that MG was unable to pick up due to the flooding
• Leeway on milk quality levels for the period following the flood event
• The doubling of the provision of interest free finance to affected farm businesses
• The availability of additional trading terms at MG Trading stores for key items such as pasture seed to replace lost pasture.

Mr Helou said that MG Field Services would continue to discuss any other individual needs of our shareholders and work with other agencies in ensuring the recovery from this event is as swift as possible.

“We also welcome the $25,000 clean up and restoration grants provided by the Victorian Government. This was a very effective program in the northwest last year.”

Link to Press Release

Murray Goulburn announces changes to strengthen its operations

Murray Goulburn Co-operative today announced changes to its Northern Victoria operations following a detailed review which considered a range of factors including available processing capacity and the significant reduction in local milk production in Northern Victoria and Southern Riverina in recent years.

The company today advised staff, suppliers and shareholders that the milk powder drying operation at its Rochester facility will be closed and placed into a “care and maintenance” program until higher milk production levels return to the region. In addition, while cheese and whey processing operations will continue on-site, the plant will now be managed as a satellite of the company’s Cobram operation. Other Rochester based services, including milk transport and field services, will continue as normal.

Gary Helou, Managing Director, Murray Goulburn, said the changes were difficult, but necessary to improve manufacturing efficiencies, increase Murray Goulburn’s global competitiveness and deliver higher farmgate prices.

Mr Helou said the changes will be implemented by 30 April 2012 and, regrettably, will reduce the number of employees at the Rochester site from 144 to 80 – a reduction of 64 positions, including 10 external contractors. Murray Goulburn staff whose positions are made redundant will also receive full entitlements and severance pay.

“It is difficult to lose good people who have worked hard for the company. We will be doing all we can to support affected staff over the coming months, including arranging counselling, financial advice and job transitioning services,” he said.

Mr Helou added that the changes to Murray Goulburn’s Northern Victoria operations will not affect the company’s ability to supply its domestic and international customers.

“This was a difficult decision and one made following an extensive internal review, which took into account the impact of recent milk production conditions in Northern Victoria and the Southern Riverina,” he said.

“Although there are encouraging signs of a recovery in milk production in the region, unfortunately it will not be sufficient to justify the continued full operation of the Rochester site at this time. It is in the interest of our suppliers, shareholders, employees, communities, customers and consumers that we ensure that MG remains a strong business into the future. We will continue to invest in programs and initiatives to significantly lower our operating costs and strengthen our dairy foods portfolio,” he said.

Murray Goulburn, Australia’s largest dairy foods processor and marketer, continues to employ more than 2,000 people, mostly in rural and regional Australia, and contributes an estimated $6 billion to the Australian economy.

Link to Press Release

Murray Goulburn Co-Operative (MG) announces second step-up in farmgate milk price for 2011/12

Australia’s farmer-owned dairy company – Murray Goulburn, today advised the company’s dairy farmer – shareholders of an increase in the farmgate milk price for the current season.

In his statement to suppliers Managing Director Mr Gary Helou advised of a price increase of $0.20/kg protein and $0.08/kg butterfat for milk supplied across the 2011/12 season.

In announcing the step-up Mr Helou said that the increase takes Murray Goulburn’s 2011/12 price to $5.22 per kilogram of milk solids on an available – weighted average basis.

“Market demand from our major customers remains solid. However the high Australian dollar relative to the USD remains a concern, as does the weakness of the Euro,” Mr Helou said.

“With these factors in mind we have again reviewed our forecast final weighted average milk price for 2011/12. We have maintained this forecast at $5.30 per ilogram milk solids on a weighted average basis subject to the remaining sales being delivered within forecast limits.”

Mr Helou said that as per his previous statements to shareholders he was focused on implementing a change agenda that delivered Murray Goulburn a simplified organisational structure and a significantly lower cost base. He also announced a round of shareholder meetings to be held in mid-March.

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Contact: Alida Martiano 9389 6476

Media Release Farmgate Milk Price Increase 1-12

Link to 2011 AGM Press Release

Murray Goulburn Co-operative (MG) and GlobalDairyTrade (GDT) announced today that MG
will begin offering dairy product (in the form of lactose) on GDT from Trading Event 65 on 3
April 2012.
MG Managing Director Mr Gary Helou said that the company was very pleased to be
participating in GDT which represents an efficient, transparent and independent method of
selling dairy products on the global market. Lactose is a product that is growing in
importance in the marketplace. This is driven by increased demand for lactose for products
such as infant formula and other nutritionals. Offering lactose on GDT will further develop the
market for this product and has the potential to reduce volatility and provide more reliable
price discovery for buyers and sellers. Accordingly we are confident that MG’s involvement
will provide benefits to MG shareholders and customers,” Mr Helou said.
General Manager of GDT, Paul Grave said that MG had become the third participant in GDT,
joining Fonterra and Dairy America.
“MG’s decision to offer lactose is a further significant step for GDT as it adds a new product
to the platform that is not currently offered by existing sellers. This demonstrates GDT’s
increasing role as a key platform for international trade in a broad range of dairy
commodities. We are delighted that a company of MG’s standing and importance in world
dairy markets has decided to participate in GDT and play a part in shaping its future,” Mr
Grave said.
GlobalDairyTrade began in July 2008 as a single-seller auction for whole milk powder. Today
the largest Australian dairy producer joins the largest American provider of milk powder and
the largest provider of globally-traded dairy products to further develop GlobalDairyTrade.
GlobalDairyTrade is a multi-seller, multi-product, twice-monthly auction that is trusted by both
buyers and sellers to efficiently and transparently discover a fair, market-clearing price for
globally-traded dairy food ingredients.
More information about MG’s offering on GDT will be provided to prospective customers in
the lead up to formal participation in April 2012.
GlobalDairyTrade sales to date total more than USD5 billion. It currently trades around
700,000 metric tonnes of products annually and has around 500 qualified bidders from more
than 80 countries.

Joint Media Release

Murray Goulburn Co-Operative (MG) announces first step-up in farmgate milk price for 2011/12

Australia’s farmer-owned dairy company – Murray Goulburn today advised the co-operative’s dairy farmer – shareholders of an increase in the farmgate milk price for the current season.
In his statement to suppliers Managing Director Mr Gary Helou advised of a price increase of $0.20/kg protein and $0.08/kg butterfat for milk supplied across the 2011/12 season.
In announcing the step-up Mr Helou said that the softening world market prices compounded by a strengthening Australian dollar remained a big concern as they significantly impacted company profitability and ultimately the final milk price.

“We need to be very vigilant in marketing our products at the highest possible value-add point and importantly at the lowest cost base. This will be a key theme for Murray Goulburn as we chart our future roadmap in the face of increasing world market volatility,” Mr Helou said.

“We have reviewed our forecast final weighted average milk price for 2011/12 provided at the start of the season. Given the current uncertainties in the market place, we believe the final weighted average milk price should be around $5.30kg per kilogram of milks solids, which is at the lower end of our previously indicated range.

Mr Helou commenced in the role as Managing Director of Murray Goulburn on 3 October after 12 years as CEO of Sunrice.

“Since my commencement my main priority has been to familiarise myself with our business, our people and our operating plans. I look forward to sharing my initial views and goals at the forthcoming shareholder-supplier meetings in early November 2011,” Mr Helou said.

Media Release Farmgate Milk Price Increase 10-11