FSF Annual Meeting presentation 3 November 2017

FONTERRA
SHAREHOLDERS’
FUND
ANNUAL MEETING
FRIDAY 3 NOVEMBER 2017

JOHN SHEWAN
Chairman
FSF Management Company

2
AGENDA
Welcome and introductionJohn Shewan
Chairman’s addressJohn Shewan
Fonterra Chairman addressJohn Wilson
Fonterra CEO’s address Theo Spierings
Questions
Resolution to re-elect retiring Director Pip DunphyJohn Shewan
Address by Pip Dunphy
General business John Shewan

3
2017 –A YEAR OF SIGNIFICANT CHANGE
INMARKET CONDITIONS
57%
FARMGATE MILK PRICE NOW
AHEAD OF DAIRY NZ’S ‘ON-
FARM’ BREAK-EVEN POINT...
10%
VS. 2015/16
...RESULTING IN A SHARP
INCREASE IN FONTERRA’S
INPUT COSTS...
GROSSMARGIN
15%
NORMALISED
EBIT
11%
NETPROFIT
AFTERTAX
...OFFSET BY SIGNIFICANT
GROWTH IN SALES OF
HIGHER VALUE PRODUCTS...
12%
CONSUMER&
FOODSERVICE
GROWTH
9%
ADVANCED
INGREDIENTSSALES
GROWTH
CONTINUED
PROGRESS
INOPERATINGCOST
MANAGEMENT
6%

4
POSITIVE FINANCIAL OUTCOME
1
Return on capital excludes goodwill, brands and equity accounted investments.Return on capital including these items was 8.3%.
2
Gearing ratio is economic net interest bearing debt divided by economic net interest bearing debt plus equity excluding hedgereserves.
11.1%
RETURN ON
CAPITAL
1
44.3%
GEARING
RATIO
2
46CENTS
EARNINGS
PER SHARE
40CENTS
DIVIDEND
PER SHARE

5
KEY EVENTS IN THE YEAR
18 November 2016Business update announced
22 March 2017Interim results announced
20 April 2017Interim distribution of 20 cents per unit paid
24 May 2017Business update announced
25 September 2017Annual results announced –EPS confirmed at 46 cents
20 October 2017Final distribution of 20 cents per unit paid

6
UNIT PRICE PERFORMANCE
•FSF unit price increased 6% in FY17
–31 July 2016:$5.69
–31 July 2017:$6.05
•Full year distribution 40 cents per unit
–Yield of 6.7%
•Strong liquidity in FSF units
1
–Average daily trading volume of 554,000
units
PriceVol. (000)
1
FY17 dividend over volume weighted average closing unit price ($5.96) across the year.
0
300
600
900
1,200
1,500
1,800
4.00
4.50
5.00
5.50
6.00
6.50
7.00
Aug 16Oct 16Dec 16Feb 17Apr 17Jun 17Aug 17Oct 17
Trade VolumeClosing Price

7
FUND KEY STATISTICS
Units on Issue¹:131 million
Fund Market Capitalisation¹:$810 million
Fonterra Market Capitalisation¹:$10 billion
Fund Size¹:8.1% of Fonterra shares on issue
12-month High/Low
2
:$6.40 (21 Feb 17) / $5.80 (7 Nov 16 )
1
At 24 October 2017
2
24 October 2016 –24 October 2017

8
39%
38%
17%
6%
Institution
Retail
3%
PWM*
1%
N/C
Holding by country
69%
18%
6%
3%
4%
Holding by investor type
UNIT REGISTER ANALYSIS
As at 23 October 2017 –comparison 28 October 2016
3%
4%
4%
* PWM = Private Wealth Management
Farmer
Shareholder
New Zealand
Australia
2%
United States
United Kingdom
N/C
Other
1%

9
DIRECTOR CHANGES
Fonterra Co-operative Group
Independent director changes
•David Jackson –retired 2 Nov 2017
•Bruce Hassall –appointed 2 Nov 2017
Farmer director changes
•Michael Spaans–retired 31 July 2017
•David MacLeod –retired 2 Nov 2017
•Leonie Guiney –retired 2 Nov 2017
•John Monaghan –retired by rotation and re-elected 2 Nov 17
•Andrew MacFarlane –elected 2 Nov 2017
•Brent Goldsack–elected 2 Nov 2017
FSF Management Company
•Ian Farrelly–retired 12 Dec 2016
•Scott St John –appointed 12 Dec 2016

YEAR IN REVIEW
John Wilson, Fonterra Chairman
Confidential to Fonterra Co-operative Group

© Fonterra Co-operative Group Ltd.
Page 11
Good season for our farmers
Return to solid results after two seasons of unusually low milk prices
1. Total available for payout = Forecast Farmgate Milk Price + Forecast Earnings Per Share (EPS) of 45-55 cents; For farm budgeting purposes the likely
dividend will be calculated in accordance with Fonterra policy of paying out 65-75 per cent of adjusted net profit after tax over time
Note: Farmgate Milk Price: $ per kgMS; Dividend: $ per share
6.107.606.085.848.404.403.906.126.75
0.27
0.30
0.32
0.32
0.10
0.25
0.40
0.40
201020112012201320142015201620172018
forecast
Farmgate Milk PriceDividend
Total
available for
payout
1
6.37
7.90
6.40
6.16
8.50
4.65
4.30
6.52
7.20-7.30

© Fonterra Co-operative Group Ltd.
Page 12
Solid business performance
1. Return on Capital (ROC) excludes goodwill, brands and equity accounted investments; Group ROC including these items was 8.3% in FY17 (FY16: 9.2%)
2. FY17 dividend over volume weighted average FCG price of $5.96 across the year; 3. Includes sales to other strategic platforms.
ANNUAL DIVIDEND YIELD
2
40CPS 6.7%
Stable
22.9BLME
VOLUME
3%
$19.2B
REVENUE
12%
$1,155M
NORMALISED EBIT
15%
11.1%
RETURN ON CAPITAL
1
Down from 12.4%
Ingredients
Volume (LME)
3
21.3 B
Gross Margin (%)9.7%
Normalised EBIT$943M
Return on Capital
1
10.3%
Consumer and Foodservice
Volume (LME)
3
5.5 B
Gross Margin (%)26.8%
Normalised EBIT$614M
Return on Capital
1
47.2%
China Farms
Volume (LME)
3
0.3B
Gross Margin (%)8.6%
Normalised EBIT$1M
$745M46C
NPAT EPS
11%

© Fonterra Co-operative Group Ltd.
Page 13
Global dairy market –positive outlook with
continued balancing of supply and demand
Note: All 12 month figures are rolling 12 months compared to previous comparable period: Australia (Jun), EU (Jun), United States (Jul), China (Jul), Asia (May), Middle
East & Africa (May), Latin America (May)
Source: Government milk production statistics; GTIS trade data; Fonterra analysis]
Demand
Supply
Russia
EU’s largest dairy
export market –trade
embargo remains
US
12 months
production
+2
%
Australia
12 months
production
-7
%
Fonterra in NZ
12 months
production
Last 3 months
(Jun, Jul, Aug)
0
%
-2
%
Asia (excl China)
12 months
imports
+10
%
Middle East & Africa
12 months
imports
-2
%
EU
12 months
production
Last 3 months
(Apr, May, Jun)
-2
%
+1
%
Latin America
12 months
imports
+11
%
China
12 months
imports
Last 3 months
(May, Jun, Jul)
+9
%
+15
%

© Fonterra Co-operative Group Ltd.
Page 14
4,000
6,000
8,000
10,000
12,000
AugSepOctNovDecJanFebMarAprMayJunJul
2,000
3,000
4,000
5,000
6,000
AugSepOctNovDecJanFebMarAprMayJunJul
1,500
2,500
3,500
4,500
5,500
AugSepOctNovDecJanFebMarAprMayJunJul
2,000
3,000
4,000
5,000
6,000
AugSepOctNovDecJanFebMarAprMayJunJul
Dairy prices rose strongly over the year
Improved Farmgate Milk Price put pressure on margins
Products informing milk price up significantlyOther products up but to a lower degree
Butter
Cheddar
Rennet Casein
+109%
+3%
+42%
Note: All prices in US dollars per MT
Source: GDT data
Whole Milk Powder
+38%

© Fonterra Co-operative Group Ltd.
Page 15

© Fonterra Co-operative Group Ltd.
Page 16

© Fonterra Co-operative Group Ltd.
Page 17

FINANCIAL
PERFORMANCE
Theo Spierings, CEO

© Fonterra Co-operative Group Ltd.
Page 19
Solid business performance
1. Return on Capital (ROC) excludes goodwill, brands and equity accounted investments; Group ROC including these items was 8.3% in FY17 (FY16: 9.2%)
2. FY17 dividend over volume weighted average FCG price of $5.96 across the year; 3. Includes sales to other strategic platforms.
ANNUAL DIVIDEND YIELD
2
40CPS 6.7%
Stable
22.9BLME
VOLUME
3%
$19.2B
REVENUE
12%
$1,155M
NORMALISED EBIT
15%
11.1%
RETURN ON CAPITAL
1
Down from 12.4%
Ingredients
Volume (LME)
3
21.3 B
Gross Margin (%)9.7%
Normalised EBIT$943M
Return on Capital
1
10.3%
Consumer and Foodservice
Volume (LME)
3
5.5 B
Gross Margin (%)26.8%
Normalised EBIT$614M
Return on Capital
1
47.2%
China Farms
Volume (LME)
3
0.3B
Gross Margin (%)8.6%
Normalised EBIT$1M
$745M46C
NPAT EPS
11%

© Fonterra Co-operative Group Ltd.
Page 20
2%
20%
36%
19%
10%
12%
More volume to higher value
1 billion LMEs shifted to Consumer, Foodservice and Advanced Ingredients
Deliver
on Foodservice potential
Selectively invest
in milk pools
Grow
our active living business
Develop
leading positions in paediatric
& maternal nutrition
Optimise
NZ milk
1
Align
our business and organisation
Buildandgrow
beyond our current
consumerpositions
3
2
4
5
6
7
DIRA
GDT
Advanced
Ingredients
Foodservice
Consumer
Note: Wheel shows percentage of total FY17 external sales (LME); Consumer, Foodservice and Ingredients growth rates include intercompany sales
27%
3%
7%
5%
9%
FY17
22.9b
LME
%
FY17 sales volume
growthover FY16
•GDT
–Volumes aligned with
lower production
•Ingredients
–Lower NZ milk
collections and record
low closing inventory
–473m LMEs shifted to
higher margin Advanced
Ingredients
•Consumer & Foodservice
–Added 576m more LMEs
–Normalised EBIT up 6%
Base
Ingredients
11%

© Fonterra Co-operative Group Ltd.
Page 21
Value creation
Solid profit with ongoing financial discipline
Note: Return on Capital (ROC) excludes goodwill, brands and equity accounted investments; Group ROC including these items was 8.3% (2016: 9.2%)
17.0%
GROSS MARGIN
$1,155M
NORMALISED EBIT
Down from 21.1%
15%
$851M
CAPEX
10%
11.1%
RETURN ON CAPITAL
Down from 12.4%
75 DAYS
WORKING CAPITAL
2days
$2,370M
OPEX
6%
NPATEPS
$745M46C
11%

© Fonterra Co-operative Group Ltd.
Page 22
Ingredients
Return on capital of 10.3%
•Challenging NZ milk collection profile
•Lower closing inventory carried into this year
•Growth in Advanced Ingredients of 9% (473m LME)
Value
•NZ Ingredients margins impacted by rising reference product
prices relative to non-reference
–Stream returns down significantly from last year
•Australia: $62m normalised EBIT from recurring business
•China milk: ($38m) impact of ongoing lower domestic prices
Velocity
•Targeted capex with Foodservice focus and Stanhope rebuild
•Optionality used to prioritise higher value production
•Yield improvements and efficient peak management
Volume
1. Includes sales to other strategic platforms
Note: Return on Capital (ROC) excludes goodwill, brands and equity accounted investments
Volume (m LME)¹
Normalised EBIT ($m)
1,204
943
20162017
22,391
21,304
20162017
(5%)

© Fonterra Co-operative Group Ltd.
Page 23
Asia
Greater China
Consumer and Foodservice
Solid performance led by Greater China
244
201
20162017
97
101
20162017
108
103
20162017
623
735
20162017
1,834
1,742
20162017
1,549
1,703
20162017
1. Sales volume growth of (1%) when excluding impact of discontinued businesses
Note: All volumes include intercompany sales
Oceania
Volume
1
Normalised EBIT
Latin America
VolumeNormalised EBIT
(5%)
18%
VolumeNormalised EBITVolumeNormalised EBIT
10%
46%
131
209
20162017
876
1,278
20162017

© Fonterra Co-operative Group Ltd.
Page 24
China opportunity
Fonterra well positioned in every segment
Deliver
on Foodservice potential
Selectively invest
in milk pools
Grow
our active living business
Develop leading positions
in paed & maternal nutrition
Optimise
NZ milk
1
Align
our business and organisation
Buildandgrow
beyond our current
consumerpositions
3
2
4
5
6
7
TODAYFonterra Milk Source (%)
3
8b
3.7b
31b
1.3b
3b
0.2b
1
30-35b
2
0.34b
5.5b
LME b
Ingredients
Consumer & Foodservice
Advanced Nutrition
Domestic Milk Pool
2013
8b
3.5b
28b
0.4b
2b
0.02b
0.06b
4b
77
50
90
80
10
50
10
10
7
10
6
100
NZAUEUChina
1. Based on April-2017 external data and analysis
2. Includes Beingmate sales of ~180m LME
3. Indicative share of sourcing
Source: Euromonitor; Fonterra analysis
Total Fonterra China
b LME Fonterrab LME China market
2

© Fonterra Co-operative Group Ltd.
Page 25
Beingmate is an important investment
•Regulatory changes
–Long-term, brand rationalisation will benefit
major domestic players
–New regulations in place on 1 January 2018
–Beingmate in first wave of approvals
•Competitive environment
–Over-supply from non-approved players
–Price competition and de-stocking
–Impacted Beingmate sales and profitability
•Financial impact
–Recognised share of one-off losses
–Impairment in carrying value
Challenging last 12 monthsStrong strategic rationale remains
1.Market fundamentals are strong
2.Partnership with Beingmate part of a
larger, profitable Greater China
business
3.Strategic partnership
value extends
beyond direct
investment

© Fonterra Co-operative Group Ltd.
Page 26
–Fonterra Australia has reached full milk
processing capacity at 2 billion litres
–Invest initial $100m immediately to de-
bottleneck plants in Australia
–Unlock 500 million litres of milk
processing capacity
–Evaluating opportunity to introduce co-
op model to Fonterra
–Strongly aligned with our integrated
cheese/whey/nutritionals milk pool
strategy
-12
-8
-4
0
4
8
12
16
11.522.533.5
ROC (%)
Milk pool
(billion litres)
Today
Future
FY15
Growing volume and value in Australia Our growth plans
Australian growth plans to meet strong
global demand

© Fonterra Co-operative Group Ltd.
Page 27
Financial discipline
Strength of the balance sheet underpins our Co-op
1.Gearing ratio is economic net interest bearing debt divided by economic net interest bearing debt plus total equity excluding hedge reserves
2.Economic net interest-bearing debt
3.Debt payback ratio is economic net interest bearing debt divided by EBITDA. Both debt and EBITDA are adjusted for the impact of operating leases
3.5
DEBT / EARNINGS
3
Up from 2.8x
44.3%
GEARING
1
Stable
AA-
CREDIT RATING
Fitch
$5.6B
NET DEBT
2
Up 2%
S&P
STABLESTABLE
$7.2B
TOTAL EQUITY
Up 4%

BUILDING THE WORLD’S LEADING
SUSTAINABLE DAIRY CO-OP

© Fonterra Co-operative Group Ltd.
Page 29
Growth
STRONG V3 CO-OP
INNOVATIVE CO-OP
SUSTAINABLE CO-OP
3 years
5 years
10+ years
NOW
•Demand-led strategy to
optimise NZ milk,
supported by milk pools
•Investing in
technology and
people for the future
•Creating sustainable
value for all
stakeholders
Competitive advantage of Cost Leadership through Scale Efficiency
Strategy focused on achieving our ambition
Three strategic horizons

© Fonterra Co-operative Group Ltd.
Page 30
Protect market share of NZ milk
Deliver sustainable value creation in NZMP
Deliver Everyday Nutrition focused growth path
Target positions in Affordable Nutrition
Deliver double-digit Foodservice diversified growth
Revitalise the Anlenebrand (Healthy Living)
Build an Active Living portfolio
Deliver China and Beingmate partnership at full potential
Develop cheese / whey supply options
Grow Australian milk pool share
Invest to deliver future-oriented capabilities
FY18 strategic priorities driving value
Deliver
on Foodservice potential
Selectively invest
in milk pools
Grow
our active living business
Develop
leading positions in paediatric &
maternal nutrition
Optimise
NZ milk
1
Align
our business and organisation
Buildandgrow
beyond our current
consumerpositions
3
2
4
5
6
7

© Fonterra Co-operative Group Ltd.
Page 31
We are embracing tomorrow’s innovation
in what we do today
AGTECHENERGY & CLEAN
TECH
ROBOTICS
HYPER-
PERSONALISATION
DIGITAL
LIVING
DIGITAL ARTIFICIAL INTELLIGENCE BIG DATABEHAVIOUR ECONOMICS
SUSTAINABLE
FARMS
SUSTAINABLE
OPERATIONS
FUTURE
CONSUMERS
GAMIFICATION
AR/VR
PRECISION
FARMING
DIGITAL
MANUFACTURING
ENERGY &
WATER
EFFICIENCY
GENOMICS
SOIL &
CROP TECH
NEW
RETAIL
FOOD SAFETY &
TRACEABILITY
BLOCKCHAIN
3D PRINTING
CONNECTED
LIFE
SHARING
ECONOMY
ENABLERS
CONSUMERS OF
THE FUTURE

© Fonterra Co-operative Group Ltd.
Page 32
We have already begun the innovation journey
Growth
STRONG V3 CO-OP
SUSTAINABLE CO-OP
3 years
5 years
10+ years
NOW
INNOVATIVE CO-OP
NEW INNOVATION
DIGITAL
TRANSFORMATION
DISRUPTIVE
BUSINESS MODELS
PARTNERSHIPS
EXPONENTIAL
TECHNOLOGIES

QUESTIONS

FONTERRA
SHAREHOLDERS’
FUND
ANNUAL MEETING
FRIDAY 3 NOVEMBER 2017

RESOLUTION 1
That Pip Dunphy, who retires by rotation and, being
eligible, offers herself for re-election, be re-elected as
Director of the Manager of the Fund

PIP DUNPHY
Director
FSF Management Company

37
VOTING
•In respect of each resolution, please tick the “for”, “against” or
“abstain” box.
•Once you have completed your voting, please place your vote in a
ballot box.
•Please raise your hand if you require a pen.
•Results will be announced to the NZX and ASX as soon as they
areavailable.

FONTERRA
SHAREHOLDERS’
FUND
ANNUAL MEETING
FRIDAY 3 NOVEMBER 2017

GENERAL BUSINESS

THANK YOU
MEETING CLOSED.