Asx Announcement Market Update

ASX Announcement Market update


Since the market update on 19 December 2008, Warrnambool Cheese and Butter Factory Company Holdings Limited ("WCB") advises that trading conditions for its key product categories have continued to decline due to the global economic crisis. Consequently, WCB is currently not able to determine whether dairy commodity prices have bottomed or not due to the considerable uncertainty that continues to exist in global markets.

In light of the impact of the global economic crisis and the associated adverse impact of lower commodity prices on WCB's profitability, the Board has reassessed WCB's business cost structure, including the milk price currently being paid to suppliers. After much consideration, WCB today advised suppliers that it will reduce the milk price paid from 1 February to 30 June 2009. Over the course of the 2008/09 year, this equates to an effective annualized reduction of approximately 12% based on the opening price advised to WCB's suppliers in June 2008.

This reduction in milk price by WCB follows announcements of similar reductions in milk prices paid to suppliers by the two largest dairy companies operating in Australia.

The recent reductions in dairy commodity prices have adversely impacted all Australian dairy exporters, however, WCB emphasizes that these reductions are off the back of record high commodity prices and milk prices during 2007/08. WCB remains confident about the future of the Australian dairy industry and, in particular, WCB's prospects going forward.


Dairy Farmers cheese joint venture with National Foods

WCB remains on track to complete the cheese JV with National Foods ("Australian Cheese Company Pty Ltd" or "ACC") in the first quarter of 2009. Further details in relation to ACC will be announced to the market in due course as part of WCB's proposed equity raising.


For more information, please contact:
For Investors:
Neil Kearney Tricia Kent
CEO and Managing Director
Office: 03 5565 3102
03 9639 2450


For Media:
Tricia Kent
Hadsel Grace
0418 585 154


SOURCE: Warrnambool Cheese and Butter Factory Company Holdings Limited