Fonterra revises forecast Farmgate Milk Price and Q1 update

6 December 2018
FONTERRA REVISES FORECAST FARMGATE MILK PRICE AND PROVIDES Q1 UPDATE
• Forecast Farmgate Milk Price range: $6.00 - $6.30 per kgMS
• Forecast earnings per share range: 25-35 cents
• Forecast New Zealand milk collections: 1,550 million kgMS, up 3%
• Sales volumes: 3.6 billion LME, down 6%
• Revenue: $3.8 billion, down 4%
• Gross margin: $646 million, down $14 million
• Gross margin percentage: 17%, up from 16.6%
• Operating expenses: $656 million, up 3%
• Capital expenditure: $188 million, up $46 million

Fonterra Co-operative Group Limited today revised its 2018/19 forecast Farmgate Milk Price range
from $6.25-$6.50 per kgMS to $6.00-$6.30 per kgMS and shared an update on its first quarter
business performance.
Fonterra Chairman John Monaghan says the revision in the forecast Farmgate Milk Price range is
due to the global milk supply remaining stronger relative to demand, which has driven a downward
trend on the GlobalDairyTrade (GDT) index since May.
“Since our October milk price update, production from Europe has flattened off the back of dry
weather and rising feed costs. US milk volumes are still forecast to be up one per cent for the year,”
says Mr Monaghan.
“Here in New Zealand, we are maintaining our forecast collections at 1,550 million kgMS. NIWA is
saying its likely we will see an abnormal El Nino weather pattern over summer and this could
impact our farmers’ milk production.
“Demand from China and Asia remains strong. However, we are seeing geopolitical disruption
impacting demand from countries that traditionally buy a lot of fat products from us.
“Today’s forecast range assumes dairy prices will firm across the balance of the season. This is
consistent with the views of other market commentators.
“There are still a number of unknowns in the global demand and supply picture and we recommend
farmers budget with ongoing caution. Fonterra’s Advance Rate has been set off a milk price of
$6.15 per kgMS.”
First quarter business update
Fonterra’s first quarter gross margin of $646 million is down $14 million compared to the same
period last year and up slightly on a percentage basis from 16.6 per cent to 17 per cent. Revenue of
$3.8 billion, is down four per cent and sales volumes were down six per cent to 3.6 billion liquid milk
equivalent (LME).

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

The Co-op’s Ingredients business, despite lower sales volumes, performed solidly during Q1 with a
gross margin of $273 million, up $28 million on last year. The Consumer business also performed
well with a gross margin of $310 million, up $10 million on last year, and volumes were up five per
cent.
Chief Executive Miles Hurrell says the Co-op generally makes a smaller proportion of its total
annual sales in the first quarter due to the seasonal nature of our milk supply.
“This means the results from Q1 do not give much insight into the Co-op’s expected earnings
performance for the full year. It does, however, put the spotlight on where we have challenges that
we need to address,” says Mr Hurrell.
“In particular, we are seeing challenges in our Australian Ingredients, Greater China Foodservice
and Asia Foodservice businesses. I want to be clear with our farmers and unit holders about how
we are tackling these issues.
“In our Australian Ingredients business, we have lower milk collections as a result of drought
conditions and increased competition for milk supply. We are responding by focusing on the
performance levers in our control – the main one being reducing our operating expenses to reflect
lower milk collections.
“The lower gross margins and sales volumes in Greater China Foodservice and Asia Foodservice
in Q1 are mainly due to the high sales volumes of butter and cream cheese at the end of Q4 2018,
a slightly slower start to sales of UHT culinary cream and more sales of UHT milk which has a lower
margin relative to our other products. We are expecting our sales to lift as we are seeing strong
sales from our distributors off the back of demand in China for New Zealand made products,
particularly our UHT culinary creams. We are also prioritising value and moving away from lower
margin contracts.”
Portfolio review
Commenting on the Board led portfolio review Mr Monaghan says there is a lot of action and
progress but it will take time to flow through into financial results.
“We have reached an agreement in principle with Beingmate that will see us return to full ownership
of the Darnum plant by 31 December 2018 and enter into a multi-year agreement for Beingmate to
purchase ingredients from us.
“We are also looking at our ongoing ownership of Tip Top and have appointed FNZC as our
external advisor to work with us as we consider a range of options. We want to see Tip Top remain
a New Zealand based business and this is being factored into our options.
“While performing well, Tip Top is our only ice cream business and has reached maturity as an
investment for us. To take it to its next phase successfully will require a level of investment beyond
what we are willing to make.
“We are still some months off from completing the full portfolio review of assets, investments and
partnerships. We are moving quickly to meet our commitment to reducing our debt levels by $800
million by the end of the financial year. This requires both improved performance from last year and
the divestment of assets.”
Lifting performance
In respect to the three-point plan to lift the Co-op’s performance, Mr Hurrell says progress is being
made on fixing the businesses that are not performing.
“Fonterra Brands New Zealand is one of the businesses that is starting to turn around. It’s early
days but overall our Consumer and Foodservice business in Oceania delivered higher sales

Fonterra Co-operative Group
Confidential to Fonterra Co-operative Group Page 3

volumes and margins for Q1 compared the same period last year. A significant contributor of this is
the improved operational performance in New Zealand.
“We have set our capital expenditure (CAPEX) limit at $650 million. While we are ahead on the
same time last year, this was planned as we completed the final stages of projects from last year.
Once these assets are delivered, our focus will turn to ensuring they hit their Return on Capital
targets.
“We remain committed to returning our operating expenses (OPEX) to FY17 levels – however, they
were up three per cent for the first quarter compared to the same period last year. The majority of
these costs were committed to before we agreed our new OPEX target. They relate to higher
advertising and promotion and storage costs in our Consumer and Foodservice business, additional
costs since taking the management of Anmum back from Beingmate and higher storage and
distribution costs for Ingredients as we collected and moved more milk than we budgeted for.”
Outlook for 2019
Mr Hurrell says the Co-op is maintaining its forecast earnings per share range of 25-35 cents.
“Q1 gross margin percentage was up on last year and we have identified the challenges that need
addressing. Our earnings forecast for the remainder of the year is based on a milk price within the
$6.00-$6.30 per kgMS range and, on this basis, we are confident in our earnings guidance.”
ENDS

For further information contact:

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

About Fonterra
We’re a global dairy nutrition company owned by 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 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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---

Business
Update
DECEMBER 2018

2
Disclaimer
This presentation may contain forward-looking statements and projections. There can be no certainty of outcome in relation to the matters to which
the forward-looking statements and projections relate. These forward-looking statements and projections involve known and unknown risks,
uncertainties, assumptions and other important factors that could cause the actual outcomes to be materially different from the events or results
expressed or implied by such statements and projections. Those risks, uncertainties, assumptions and other important factors arenot all within the
control of Fonterra Co-operative Group Limited (Fonterra) and its subsidiaries (the Fonterra Group) and cannot be predicted by the Fonterra
Group.
While all reasonable care has been taken in the preparation of this presentation none of Fonterra or any of its respective subsidiaries, affiliates and
associated companies (or any of their respective officers, employees or agents) (Relevant Persons) makes any representation, assurance or
guarantee as to the accuracy or completeness of any information in this presentation or likelihood of fulfilment of any forward-looking statement or
projection or any outcomes expressed or implied in any forward-looking statement or projection. The forward-looking statements and projections in
this report reflect views held only at the date of this presentation.
Statements about past performance are not necessarily indicative of future performance.
Except as required by applicable law or any applicable Listing Rules, the Relevant Persons disclaim any obligation or undertaking to update any
information in this presentation.
This presentation does not constitute investment advice, or an inducement, recommendation or offer to buy or sell any securitiesin Fonterra or the
Fonterra Shareholders’ Fund.

3
Business update summary
•Forecast Farmgate milk price range is $6.00 -$6.30 per kgMSand is based on firming global dairy prices over the
balance ofthe season
•Maintaining earnings guidance
–Q1 margins in-line with last year
–Solid New Zealand Ingredients performance and growth in Consumer
–Challenges in Australia Ingredients, Asia Foodservice and China Foodservice
•Making good progress on plan to lift performance
•Committed to financial discipline (opex, capex and debt reduction targets)
•Released our second Sustainability Report in November

4
Forecast Farmgate Milk Price of $6.00 -$6.30
Forecast based on global dairy prices firming over the balance of the season
•Forecast Farmgate Milk Price has declined this season reflecting lower global dairy prices. Since June
–GDT index has declined 20%
–Butter prices have declined 33%
–AMF is down 24%
–WMP is down 17%
•Forecast Farmgate Milk Price range of $6.00 -$6.30 per kgMSassumes some firming in global dairy prices over the balance
of theseason
─This is consistent with the direction of the dairy future prices according to NZX Futures and other market commentators
•The Farmgate Milk Price profile throughout the year is a key determinant of earnings
–This global dairy price outlook supports our 25 –35 cents earnings guidance for FY19

5
Note: All changes are expressed relative to the first quarter of FY18. Gross margin from Q1 FY18 shown with direction of change denoted by arrow. 1) Includes inter-segment sales.
FY19 Q1 performance summary
$28m
6%
Volume LME
3.6billion
4%
Revenue
$3.8billion
$14m
Gross Margin
$646m
$46 million
Capex
$188million
3%
Opex
$656million
from 16.6%
17.0%
from 8.0%
4%
Ingredients
Volume LME
1
3.5b
Gross Margin
1
$273m
9.1%
4%
Consumer &
Foodservice
Volume LME
1
1.2b
Gross Margin
1
$390m
22.9%
20%
China
Farms
Volume LME
1
56m
Gross Margin
1
-$2m
-4.2%
$17m
from 24.0%
$7m
from 7.3%

6
Outlook for 2019
•Forecast Farmgate Milk Price has been lowered to $6.00
-$6.30 from $6.25 -$6.50 per kgMS, based on:
–Stronger global milk supply
–Lower global dairy prices to date but forecast to firm
over the balance of the season
–Stable global demand
•Earnings per share range of 25-35 cents maintained
•Key drivers of earnings include:
–New Zealand Ingredients timing of sales
–Relative returns between Ingredient products (which
are currently positive but can be volatile)
–Milk price for the balance of the year
$6.00
-
$6.30
per kgMS
Forecast Farmgate
Milk Price
25-35
cents
per share
Forecast Earnings

7
Plan to lift performance
Take stock, get back to basics, ensure more accurate forecasting
CommitmentsQ1 FY19 Update
•Reduce debt by $800 million by year-end•Processes underway for three assets:
–Beingmate
•Anmumdistribution returned toFonterra
•Full ownership of Darnumplant to return to
Fonterra, agreed in principle
–Tip Top: appointed adviser to review range ofoptions
–Third asset: progressing
•Bring gearing back within 40-45% range by year-end•On track for the full-year
•Reduce capex to $650 million inFY19•On track for the full-year
•Reduce opexback to FY17 levels over the next
twoyears
•Comprehensive review underway

APPENDIX

9
Milk collections forecast maintained for the season
10
20
30
40
50
60
70
80
90
JunJulAugSepOctNovDecJanFebMarAprMay
Volume (m litres/day)
2016-17
2017-18
2018-19
•New Zealand milk collections forecast maintained at
1,550million kgMS, up 3% compared to last season
•A strong start to the season in New Zealand due to
favourable weather conditions
•NIWA forecasting an abnormal El Niño weather pattern
over summer
Strong start to the season but risk of a hot, dry summer
New Zealand Milk Collection
SeasonTotal Milk Solids (kgMS)Peak Day Milk
2016/171,526m (down 3%)80m litres
2017/181,505m (down 1%)82m litres
2018/19F1,550m (up 3%)85m litres

10
China
+17%
12 months
Higher supply expected to moderate
1.Global Supply is represented by global milk production data
2.Global Demand is represented by global dairy import data
Note: All 12-month figures are rolling 12 months compared to previous comparable period: Australia (Sep), EU (Sep), United States (Oct), China (Mar), Asia (July), Middle East & Africa (July), Latin America (July).
Source: Government milk production statistics; GTIS trade data; Fonterra analysis.
Global Dairy Market
Rest of
Asia
+4%
12 months
Middle
East/Africa
-1%
12 months
Latin
America
-2%
12 months
Europe
+2%
12 months
+0.3%
July to
September
United
States
+1%
12 months
New Zealand
+2%
12 months
+6%
August to October
Australia
+2%
12 months
-4%
July to
September
Global
Supply
1
Global
Demand
2
Russia
EU’s largest
dairy export
market
Trade
embargo
remains

11
1.Includes sales to other strategic platforms
Note: Volume is in million LME. Gross margin is in NZD millions unless otherwise stated. All changes are expressed relative to the first quarter of FY18.
Improved margins even with challenges in Australia
Performance
•Q1 volumes are down 4% on last year due to:
–A slower start but has now picked up
–Lower government tender volumes
•Q1 margins are up on last year:
–Lower input costs
–Improved mix
–Positive stream returns
•Australia is a challenging market due to lower
collections because of drought and increased
competition for milk
Ingredients
FY18FY19
Volume¹
Gross
Margin
-4%
Growth
3,6083,469
FY18FY19
$273
9.1%
$245
8.0%
$28

12
Volumes and margins softening due to Foodservice
FY18FY19
1.Includes sales to other strategic platforms.
Note: Volume is in million LME. Gross margin is in NZD millions unless otherwise stated. All changes are expressed relative to the first quarter of FY18.
Consumer and Foodservice
FY18FY19
Volume¹
Gross
Margin
Performance
•Q1 volumes are down 4% on last year:
–Consumer volumes are up 5%
–Foodservice volumes are down 15%
•Q1 margins are down on last year with Consumer
margins flat and Foodservice down
•Foodservice Asia and Greater China
belowexpectations
•Oceania delivered higher margins across both
consumer and foodservice portfolios:
–Improved operational performance in
NewZealand
–Price increases in Australia
1,2311,184
-4%
Growth
$407$390
24.0%
22.9%
$17

13
Greater
China
Asia and Greater China Foodservice offset stronger Consumer performance
364349
FY18FY19
1.Includes sales to other strategic platforms.
Note: Volume is in million LME. All changes are expressed relative to the first quarter of FY18.
Consumer and Foodservice by region
273222
FY18FY19
181191
FY18FY19
412422
FY18FY19
AsiaOceania
Latin
America
Volume¹
Gross
Margin
22.6%
from
23.2%
Growth
-4%
-19%
+2%
+5%
$103m
$4m
23.6%
from
28.6%
$75m
$25m
19.1%
$105m
$12m
28.4%
from
29.3%
$107m
$7m
from
17.7%

14
Higher growth and stable margins underpin a strong Q1
712744
FY18FY19
1.Includes sales to other strategic platforms.
Note: Volume is in million LME. Gross margin is in NZD millions unless otherwise stated. All changes are expressed relative to the first quarter of FY18
Consumer
FY18FY19
Volume¹
Gross
Margin
Performance
•Q1 volumes are up 5% on last year with growth in
allregions
•Q1 Consumer margins are largely flat on last year,
with higher margins in Asia and Oceania offset by
softer margins in Greater China
•Higher Q1 margins in Asia and Oceania are due to:
–Benefits from improved product mix as we
launched new products in Asia
–Better operational performance in New Zealand
–Strong performance in Australia
•Lower Q1 margins in Greater China are due to:
–Delay in product launch
–Increase in cross-border restrictions in Hong Kong
$300
$310
+5%
Growth
26.4%
26.1%
$10

15
Greater
China
Growth registered in every region, softer margins in Greater China
211222
FY18FY19
1.Includes sales to other strategic platforms.
2.FY18 LME volume has been adjusted for the inclusion of eliminating entries to improve comparability.
Note: Volume is in million LME. All changes are expressed relative to the first quarter of FY18.
Consumer by region
39
41
FY18FY19
157163
FY18FY19
306318
FY18FY19
Asia²Oceania
Latin
America
Volume¹
Growth
+5%
+6%
+4%
+4%
Gross
Margin
28.5%
from
27.6%
$91m
$14m
36.3%
from
41.4%
$38m
$1m
19.4%
from
18.7%
$82m
$7m
29.0%
from
30.0%
$99m
$9m

16
Asia and Greater China cause lower volumes and profits
519440
FY18FY19
1.Includes sales to other strategic platforms.
Note: Volume is in million LME. Gross margin is in NZD millions unless otherwise stated. All changes are expressed relative to the first quarter of FY18.
Foodservice
FY18FY19
Volume¹
Gross
MarginPerformance
•Q1 volumes are down 15% on last year due to Asia
and Greater China performance
–Follows strong Q4 volumes
•Q1 Foodservice margins are down on last year, with
higher margins in Oceania and Latin America offset
by lower margins in Asia and Greater China
•Lower Q1 margins in Asia and Greater China are
dueto:
–Slower start to sales of butter, cream cheese and
UHT cream
–Narrowing of margins for butter and UHT cream
–Solid growth of UHT milk sales (lower margin
relative to other products)
–A reduction of volume sold through the
QSRchannel
$107$79
-15%
Growth
19.2%
15.4%
$28

17
Greater
China
Value over volume drive Asia and Greater China volumes down
154127
FY18FY19
1.Includes sales to other strategic platforms.
Note: Volume is in million LME. All changes are expressed relative to the first quarter of FY18.
Foodservice by region
235181
FY18FY19
24
28
FY18FY19
106104
FY18FY19
AsiaOceania
Latin
America
Volume¹
Growth
-18%-23%-2%+17%
Gross
Margin
8.8%
from
14.9%
$12m
$10m
17.4%
from
23.9%
$37m
$24m
17.8%
from
14.4%
$23m
$5m
22.2%
from
20.7%
$8m
$2m

18
Living within our means
Committed to strong financial discipline
FY17
levels
over next
two years
Opexreducing to
$650
million
Capex set at
•Higher opexin Q1 versus last year was largely due to
higher spend in Consumer and Foodservice. The increase
was due to:
–Higher pre-planned A&P
–Storage expenses
–Costs related to bringing Anmumback in-house
•In Ingredients, storage and distribution spend was up in Q1
versus last year
•Savings made in Group Functions
•Target to return to FY17 levels within two years
•We are on track to reduce capex from $861 million to
$650 million this year
•Higher capex in Q1 versus last year due to the timing of
completion of projects carried over from last year
•Capex is not evenly spread out through the year

19
1) Includes bulk liquid milk. 2) Q1FY19 revenue and sales volume includes Foodservice volumes to China, Latin America and Quick Service Restaurant channels but these are not included in FY18. This volume in Q1FY19 is 34,000 metric tonnes. Prior
years have not been restated.
New Zealand Ingredients product mix
3,6083,469$245
Q1 FY18Q2 FY18Q3 FY18Q4 FY18Q1 FY19
2
Change
Q1 FY18
to Q1 FY19
Production Volume (000 MT)
Reference583 683 481 103 6339%
Non-Reference237 246 208 70 227(4)%
SalesVolume(000 MT)
Reference287 614 455 439 247(14)%
Non-Reference
1
130 180 168 210 15922%
Revenue ($ per MT)
Reference4,928 4,715 4,636 5,214 5,2577%
Non-Reference
1
5,777 5,958 5,555 5,764 5,405(6)%

20
Acronyms and Definitions
Glossary
AMF
Anhydrous Milk Fat
BMP
Butter Milk Powder
Base Price
Prices used by Fonterra’s sales team as referenced
against GDT prices and other relevant benchmarks
DIRA
Dairy Industry Restructuring Act 2001 (New Zealand)
GDT
Global Dairy Trade, the online provider of the twice
monthly global auctions of dairy ingredients
Gearing Ratio
Economic net interest-bearing debt divided by
economic net interest-bearing debt plus equity
excluding cash-flow hedge reserves
Farmgate Milk Price
The price for milk supplied in New Zealand to
Fonterraby farmer shareholders
Fluid and Fresh Dairy
The Fonterra grouping of skim milk, whole milk and
cream –pasteurised or UHT processed, concentrated
milk products andyoghurt
kgMS
Kilogram of milk solids, the measure of the amount of
fat and protein in the milk supplied to Fonterra
LME (Liquid Milk Equivalent)
A standard measure of the amount of milk (in litres)
allocated to each product based on the amount of fat
and protein in the product relative to the amount of fat
and protein in standardised raw milk
Non-Reference Products
All dairy products, except for Reference, produced by
the NZ Ingredients business
Price Achievement
Revenue achieved over the base price less incremental
supply chain costs above those set out in the Milk
Pricemodel
Reference Products
The dairy products used in the calculation of the
Farmgate Milk Price, which are currently WMP, SMP,
BMP, butter and AMF
Regulated Return
The earnings component of Milk Price generated from
a WACC return on an assumed asset base
Season
New Zealand: A period of 12 months to 31 May in
eachyear
Australia: A period of 12 months to 30 June in
eachyear
SMP
Skim Milk Powder
Stream Returns
The gross margin differential between Non-Reference
Product streams and the WMP stream (based on
baseprices)
WACC
Weighted Average Cost of Capital
WMP
Whole Milk Powder

21
Glossary
Fonterra Strategic Platforms
Ingredients
The Ingredients platform comprises bulk and specialty dairy products such as milk powders, dairy fats, cheese and proteins manufactured in New Zealand, Australia,
Europe and Latin America, or sourced through our global network, and sold to food producers and distributors in over 140 countries. It also includes Fonterra
FarmSource™ retail stores.
Consumer
The Consumer platform comprises branded consumer products, such as powders, yoghurts, milk, butter, and cheese. Base productsare sourced from the ingredients
business and manufactured into higher-value consumer dairy products.
Foodservice
The Foodservice platform comprises a range of branded products and solutions for commercial kitchens, including bakery butter, culinary creams, and cheeses.
China Farms
The China Farms platform comprises the farming operations in China, which produce high-quality fresh milk for the Chinese market.

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1
GLOBAL DAIRY
UPDATE
NOVEMBER 2018
KEY DATES
End February 2019
Deadline for Applications to
Supply Fonterra
Late March 2019
FY19 Interim Results
Announcement
May 2019
Q3 Business Update
Announcement
1 June 2019
Measurement Date for Share
Standard 2019/20 Season
• US production g
rowth remains steady, EU
growth easing and Australia declining.
Production in New Zealand up on last
y
ear.
•Exports from Australia and the US continue
to grow. European and New Zealand
exports down.
•Impor
ts into Asia and China show
continued growth. Middle East, Africa and
Latin America are flat.
•
In October Fonterra New Zealand milk
collection increased 5% to 220 million
kgMS and Fonterra Australia milk collection
decreased 14% to 16 million kgMS. There
is a growing risk of a hot dry summer in
both countries.
•2019 first quarter business update.
•Forecast Farmgate Milk Price range for the 2018/19 season
is $6.00-$6.30 per kgMS .
•Forecast earnings per share unchanged.
•Anchor™ Light Proof™ milk bottle will soon be appearing
on farms across New Zealand, but you won’t find them in
the fridge. Fonterra has teamed up with Kiwi-owned start
up, Future Post™, to turn milk bottles into fence posts for
kiwi farms.
•
The next issue of the Global Dairy Update will be published
on 31 January 2019.
COMING UP...

%%%
To view a chart that
illustrates year-on-year
changes in production –
%
2
OUR MARKETS
GLOBAL PRODUCTION
US PRODUCTION
GROWTH REMAINS
STEADY, EU GROWTH
EASING AND AUSTRALIA
DECLINING. PRODUCTION
IN NEW  ZEALAND UP ON
LAST  YEAR
Total New Zealand milk
production increased 6%
in October compared to
the same month last year.
This has been driven by
favourable weather early in
the season.
Production for the 12 months
to October was 2% higher
than last year driven by
a record peak October
2018 production.
However there is a risk
of a hot, dry summer.
The expectation is for
non-traditional El Niño
conditions to develop over
the next three months.
Fonterra collections are
reported for October, see
page 5 for details.
Australian milk
production decreased 3%
in September compared to
the same period last year.
Drought across Eastern
Australia and input prices are
impacting Victoria, NSW and
Queensland. The downturn
in these states was partly
off-set by strong growth in
South Australia and stable
production in Tasmania.
Production for the 12 months
to September was up 2%
compared to the same
period the previous year.
Fonterra collections in
Australia are reported
for October, see page 5
for details.
EU milk production saw
no growth in September
compared to the same
period last year.
The Netherlands experienced
the largest monthly decline.
The Netherlands' milk
production, on an annualised
basis, has remained flat since
mid-2016. In the month,
Ireland and Poland had
higher production.
Production for the 12 months
to September was up 2%
compared to the same
period last year.
US milk production was
up 1% in October compared
to the same period last year.
The US continues to see
relatively steady production
growth driven by yield
per cow.
Milk production for the
12 months to October
increased by 1% compared
to the same period last
year, continuing a steady
growth trend.
NEW ZEALANDAUSTRALIAEUROPEAN UNIONUSA
Production change
for the 12 months to
September 2018
Production change
for the 12 months to
October 2018
Production change
for the 12 months to
September 2018
Production change

for the 12 months to
October 2018
2212

%
To view a chart that
illustrates year-on-year
changes in exports –
%%
3
OUR MARKETS
GLOBAL EXPORTS
EXPORTS FROM
AUSTRALIA  AND  THE
US  CONTINUE TO
GROW. EUROPEAN
AND NEW  ZEALAND
EXPORTS  DOWN
Total New Zealand dairy
exports decreased by 10%,
or 18, 000 MT, in September
compared to the same period
last year. This was primarily
driven by declines in WMP,
SMP and cheese, down a
combined 15, 000  MT.
Exports for the 12 months
to September were down
1%, or 26,000 MT, on the
previous comparable period.
This continues to be driven by
lower volumes across WMP,
AMF, cheese and SMP, down
a combined 78,000 MT. Fluid
and fresh dairy and infant
formula continued strong
growth, up 57,000  MT.
EU dairy exports decreased
by 7%, or 31,000 MT, in
August compared to the
same period last year. This
was primarily driven by
declines in fluid and fresh
dairy, WMP and SMP, down a
combined 35,000  MT.
Exports for the 12 months
to August were up 1%,
or 26,000 MT, on the
previous comparable period.
Continued upside in SMP
and infant formula remain
the primary drivers behind
European dairy export
growth, up a combined
95,000  MT.
US dairy exports increased
by 10%, or 16,000 MT, in
September compared to
the same period last year.
Growth in SMP and WMP of
a combined 16,000 MT, was
the primary driver behind
this increase.
Exports for the 12 months to
September were up 12%, or
264,000 MT, on the previous
comparable period.
This increase was driven by
growth across SMP, lactose,
whey powder and WPC
and WPI, up a combined
202,000  MT.
Australian dairy exports
increased 3,700 MT in
August compared to the
same period last year. This
growth was due to upside
in most categories, offset by
declines in fluid products,
WMP, and other powders.
Exports for the 12 months
to August were up 4%, or
29,000 MT, on the previous
comparable period.
Fluid and fresh dairy, cheese,
and infant formula continued
to make up most of growth
in Australian exports, up a
combined 44,000  MT.
NEW ZEALANDAUSTRALIAEUROPEAN UNIONUSA
1241
1
Export change for the 12
months to September 2018
Export change for the 12
months to August 2018
Export change for the 12
months to September 2018
Export change for the 12
months to August 2018
%

%%%
%
To view a chart that
illustrates year-on-year
changes in imports –
4
OUR MARKETS
GLOBAL IMPORTS
IMPORTS INTO ASIA
AND CHINA SHOW
CONTINUED  GROWTH.
MIDDLE  EAST, AFRICA AND
LATIN AMERICA ARE FLAT
Latin American dairy
import volumes¹ increased
1%, or 1,000 MT, in July
compared to the same
period last year. This increase
was driven by fluid and
fresh dairy, SMP and AMF,
up a combined 7,000  MT.
This was partially offset by
reductions in WMP and whey
powder, down 5,000  MT.
Imports for the 12 months
to July were down 2%, or
41,000 MT, compared to the
same period the previous
year. This decline was
primarily driven by WMP,
AMF, and cheese down a
combined 103,000 MT. An
increase in SMP and whey
powder of 49,000 MT offset
some of the decline.
Asia (excluding China)
dairy import volumes¹
increased 13%, or 47,000  MT,
in July compared to the same
period last year. Growth in
fluid and fresh dairy, WMP,
cheese and whey powder
of 38,000 MT drove the
increase. A decline in lactose
and SMP of 26,000 MT
offset gains.
Imports for the 12 months
to July were up 4%, or
160,000 MT, compared to
the same period the previous
year. Growth in WMP
and fluid and fresh dairy
of 134,000 MT were the
primary drivers.
Middle East and Africa
dairy import volumes¹
decreased 9% or 31,000 MT
in July compared to the same
period last year. Small growth
in SMP and MPC products
was offset by declines in
fluid and fresh dairy, cheese,
other powder and cultured
products of 33,000  MT.
Imports for the 12 months
to July were down 1%, or
42,000 MT, compared to the
same period the previous
year. The reduction was
driven by fluid and fresh
dairy and cheese, down a
combined 125,000  MT.
China dairy import
volumes² increased 3%,
or 7,000 MT, in March
compared to the same period
last year. This was driven by
a combined 14,000 MT, or
22%, growth in fluid and
fresh dairy, butter and lactose
categories. Declines in WMP
of 6,000 MT partially offset
this growth.
Imports for the 12 months
to March were up 17%, or
394,000 MT, compared to
the same period last year.
Strong demand out of China
continued with imports across
all key categories up for the
period. Infant formula, WMP
and SMP imports added a
combined 220,000 MT of
additional volumes.
LATIN AMERICAASIAMIDDLE EAST & AFRICACHINA
Import change for the 12
months to March 2018
Import change for the 12
months to July 2018
Import change for the 12
months to July 2018
Import change for the 12
months to July 2018
417
1
2
1 Estimates are included for those countries that have not reported data.2 China has suspended trade data, citing system technical issues. Based on exports to
China, we estimate June volumes grew 15% compared to the previous comparable period.

%%%%
To view a table that shows our
detailed milk collection in New
Zealand and Australia compared
to the previous season –
VOLUME M LITRESDAY
JUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAY










5
OUR MARKETS
FONTERRA MILK COLLECTION 2018/19 SEASON
NEW ZEALANDNORTH ISLANDSOUTH ISLANDAUSTRALIA
Increase for the season from
1 June to 31 October
Increase for the season from
1 June to 31 October
Increase for the season from
1 June to 31 October
Decrease for the season
from 1 July to 31 October
457
12
NEW ZEALAND MILK COLLECTION
Fonterra’s milk collection
across Australia for the
four months to 31 October
reached 45 million kgMS,
down 12% on the same
period last season.
Australia collections in
October reached 16 million
kgMS, down 14% on the
same month last season.
Rising costs and availability
of key on-farm inputs
continue to trend
substantially above long-term
averages resulting in
increased cull cow rates. The
poor seasonal outlook and a
very competitive milk supply
market will more than likely
continue to impact F19 milk
supply. The likelihood of an
El Niño system developing is
at 70% (Australian Bureau of
Meteorology).
North Island milk
collection in October
reached 131 million kgMS,
6% higher than October
last season.
Most North Island regions
have benefited from
favourable weather and
good animal health, resulting
in milk volumes ahead of
last season. Northland
has experienced slower
pasture growth than
other regions due to less
favourable weather.
North Island milk collection
for the 2018/19 season to
date reached 339 million
kgMS, up 4%.
South Island milk
collection in October
reached 89 million kgMS,
5% higher than October
last season.
Positive weather and on-farm
conditions have continued,
allowing for good grass
growth across most regions.
South Island milk collection
for the 2018/19 season to
date reached 189 million
kgMS, up 7%.
Fonterra’s milk collection
across New Zealand for the
five months to 31 October
reached 527 million kgMS.
New Zealand collections in
October reached 220 million
kgMS, 5% up on the same
month last season.
Favourable climatic
conditions continued into
October, leading to very
good milk production for
the month across most of
the country.
NIWA is saying its likely
we will see an abnormal
El Niño weather pattern
over summer and this
could impact our farmers’
milk production.

%%%
%%%
To view more information,
including a snapshot of the
rolling year-to-date results –
%
6
GDT PRICE INDEXNZDUSD SPOT RATE
NOV SEP FEB APR JUL SEP DEC JAN APR JUN NOV 


,
, 
,
.
.
.
.
.
PRICE INDEX
NZD  USD
OUR MARKETS
FONTERRA GLOBAL DAIRY TRADE RESULTS
Fonterra GDT sales
by destination:
Dairy commodity prices
and New Zealand
dollar trend
The New Zealand dollar
strengthened through
the month of November
driven by strong local
economic indicators.
Fonterra GDT results at
last trading event
4 December 2018:
The next trading event will be held on 18 December 2018. Visit www.globaldairytrade.info for more information.
Change in Fonterra’s
weighted average product
price from previous event
3.9
Fonterra’s weighted
average product price

(USD/MT)
2,851
USD
Fonterra product quantity
sold on GDT
000’ MT
35.4
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
MIDDLE EAST AND AFRICA
LATIN AMERICA
OTHER
USD 4,755/MT
3.9
AMF
USD 3,745/MT
3.0
BUTTER
USD 2,667/MT
2.6
WMP
USD 5,167/MT
2.0
RENNET CASEIN
USD 1,971/MT
0.0
SMP
USD 3,184/MT
2.1
CHEDDAR
35,408
MT
LATEST AUCTION
342,432
MT
FINANCIAL
YEAR‑TO‑DATE

2019 THREE-MONTH
BUSINESS  UPDATE
REVENUE
VOLUME
GROSS MARGIN
17.0
%
3.6
B LME
3.8
B$
DOWN 6%
UP 3%
DOWN $14 MILLION
UP $46 MILLION
DOWN 4%
UP FROM 16.6%
OPEX
$
656
M
$
646
M
Fonterra’s gross margin
for the three months to
31 October was in line with
last year. Overall volume was
down 6% to 3.6 billion LME,
reflecting lower volumes
in both Ingredients and
Consumer and Foodservice.
In Ingredients, this was
predominantly due to the
timing of sales. In Consumer
and Foodservice, higher
consumer volumes (up 5%
compared to the same period
last year) were offset by
lower foodservice volumes
(down 15% compared to
the same period last year).
Group revenues were down
4% compared to the same
period last year, as lower
volumes were only partially
offset by higher pricing.
The Ingredients business
delivered a good first quarter
despite lower volumes. First
quarter volumes were down
4% compared to
the same
period last year because of a
slower start to the year, which
has now picked up, and lower
government tender volumes.
First quarter margins were up
to 9.1% (from 8.0% last year).
This was a result of lower
input costs, positive stream
returns and an improved mix.
Australia is a challenging
market for Ingredients due
to lower collections because
of drought and increased
competition for milk.
Consumer and Foodservice
volumes were down 4%
compared to the same
period ast year and the
gross margin declined to
22.9%, from 24% last year.
Consumer margins were
largely flat on the same
period last year (26.1%),
Foodservice margins
declined to 15.4%, from
19.2%. The decline in
volumes and profitability
in Foodservice Asia and
Foodservice Greater China
was due to a slower start in
sales of butter, cream cheese
and UHT cream. In contrast,
Oceania performed better
across both consumer and
foodservice portfolios.
Our China Farms operations
experienced a volume
decline of 20% compared
to the same period last year.
This was due to unfavourable
weather which adversely
affected yield. We also
incurred higher effluent costs
this quarter which pushed
down gross margin to (4.2)%,
from 7.3% last year.
Group operating expenditure
(opex) was up 3% this
quarter mainly due to higher
expenditure in Consumer
and Foodservice. In part
this was due to pre-planned
A&P, higher storage and
costs related to bringing
Anmum back in-house. We
also had higher storage
and distribution costs in
Ingredients from collecting
and moving more milk this
quarter. Our target is to
reduce opex to FY17 levels
over the next two years.
Higher capital expenditure
(capex) in Q1 versus last
year was due to timing
of completion of projects
carried over from last year.
We are on track to reduce
capex from $861 million to
$650 million this year.
The inclusion of off-GDT
sales has contributed 3 cents
per kgMS for the season to
date to 31 October 2018.
THE OUTLOOK
Forecast Farmgate Milk Price
range for the 2018/19 season
is $6.00-$6.30 per kgMS.
Our forecast milk collection
for the season is unchanged
at 1,550 million kgMS.
There is still a lot of
variability in our full year
collections forecast. NIWA
is saying its likely we will see
an abnormal El Niño weather
pattern over summer and
this could impact our
farmers’ milk production.
Today's forecast range
assumes dairy prices will
firm across the remainder of
the season.
Our forecast earnings per
share is unchanged at
25-35 cents. The timing of
delivery of earnings over
the year will be driven by
the timing of New Zealand
Ingredient sales, the milk
price for the balance of the
year and relative returns
between Ingredients
products (which are currently
positive but can be volatile).
$
M
188
CAPEX
7
OUR PERFORMANCE

8
OUR CO-OP
From Plastic to Posts
Anchor™ Light Proof™
milk bottles will soon be
appearing on farms across
New Zealand, but you won’t
find them in the fridge.
Fonterra has teamed up
with Kiwi-owned start
up, Future Post™, to turn
milk bottles and other soft
plastics into fence posts for
kiwi farms.
Fonterra Brands
New Zealand’s (FBNZ)
Sustainability and
Environment Manager,
Larisa Thathiah, says the
posts are an innovative new
way for farmers to improve
their on-farm sustainability.
“This partnership
provides farmers with an
environmentally-friendly
fencing option, made from
the packaging of our farmers’
milk, which is pretty special,”
says Larisa.
“It’s not enough to just
recycle anymore, it’s about
creating less waste full stop,
or at least turning it into
something useful. That’s
why these fence posts are
so exciting – they’re made
from 100% recycled material,
and have a life expectancy of
more than 50 years.”
The Future Post™
partnership is the latest
waste reduction initiative
from Fonterra. Last year,
the Co-op partnered with
SKYCITY to turn Anchor™
Light Proof™ milk bottles
into shampoo, conditioner
and body lotion bottles
for guests.
Managing Director
of Future Post™,
Jerome Wenzlick, says it’s
great to have support from
Fonterra and he’s looking
forward to developing
other sustainable products
for farmers.
“What we’re doing is
re-purposing waste that
could have gone to landfill
and turning it in to a valuable
product for consumers,”
says Jerome.
“Our partnership with
Fonterra gives us access
to a steady supply of raw
material from the Co-op’s
own recycling initiatives.
It also gives us access to
a network of nationwide
Farm Source stores that can
sell the fence posts, and
access to 10,000 farmers
who are actively engaged
in environmental initiatives,
like fencing to keep cows out
of waterways and planting
along river banks.”
“Future Post™ is a start-up,
but we have plans for
some new products in
2019, including those for
non-farming sectors.”
Anchor™ Light Proof™ milk
bottles are collected from
the Fonterra Takanini site
and transported to the
Future Post™ Waiuku plant,
where they are mixed with
soft plastics and turned into
fence posts.
The fence posts will be
available in selected Fonterra
Farm Source stores across
the North Island in the New
Year, with plans to launch in
South Island stores mid-2019.
Fonterra CEO Miles Hurrell
and Future Post Managing
Director Jerome Wenzlick
revealed a first peak at the
posts at Fonterra’s Open
Gates event in Karaka.
FBNZ SUSTAINABILITY AND ENVIRONMENT MANAGER LARISA THATHIAH,
FONTERRA CEO MILES HURRELL AND FUTURE POST MANAGING DIRECTOR
JEROME WENZLICK

PRODUCTION
AUSTRALIAAVERAGE
UNITED STATES
NEW ZEALANDEU
DEC JUL JUN MAY MAR FEB JAN SEP NOV OCT AUG APR 
LIQUID MILK M LITRES











,









EXPORTS
AUSTRALIA
UNITED STATES
NEW ZEALANDEU
AUG JUL JUN APR MAR FEB JAN DEC NOV OCT SEP MAY 
MT s







AVERAGE
IMPORTS
MIDDLE EAST & AFRICALATIN AMERICA
ASIACHINA
JUL JUN APR MAR DEC JAN FEB SEP NOV OCT MAY AUG 
MT s









AVERAGE
9

SUPPLEMENTARY INFORMATION
Global Dairy Market
The charts on the right
illustrate the year-on-year
changes in imports, exports
and production for a range of
countries that are important
players in global dairy trade.
The absolute size of
the bars represents the
change in imports, exports
or production, relative
to the same period the
previous year.
Averages are shown where
data is complete for the
regions presented.
NOTE: Data for EU and Australia to September; New Zealand and US to October.
NOTE: Data for EU and Australia to August; US and New Zealand to September.
NOTE: Data for China to June; Asia, Middle East and Africa, Latin America to July.
SOURCE: Government milk production statistics/GTIS trade data/Fonterra analysis.

WEIGHTED AVERAGE PRICEQUANTITY SOLD
APR 
MAR 
DEC NOV 
DEC 
JAN 
JUL 
AUG 
MAY 
SEP 
FEB 
OCT 
JUN 

,

,

,

,
,

,

,

,

,
,
,
,
WEIGHTED AVERAGE PRICE USDMT
QUANTITY SOLD  MT
10

SUPPLEMENTARY INFORMATION
Fonterra milk
production
The table on the right
shows Fonterra milk solids
collected in New Zealand
and Australia compared
to the previous season.
MILK COLLECTION
(MILLION KGMS)
OCTOBER
2018
OCTOBER

2017
MONTHLY
CHANGE
SEASON-
TO-DATE
2018/19
SEASON-
TO-DATE
2017/18
SEASON-
TO-DATE
CHANGE
Total Fonterra
New Zealand
220.2208.85.4%527.2502.44.9%
North Island131.3124.35.7%338.7326.93.6%
South Island88.984.65.1%188.6175.57.4%
Fonterra Australia15.518. 1(14.4%)45.351.5(12.0%)
Fonterra GDT results
This table provides more
information on the latest
results, including a snapshot
of the year-to-date results.
LAST TRADING EVENT
(4 DECEMBER 2018)
YEAR-TO-DATE

(FROM 1 AUGUST 2018)
Quantity Sold on GDT
(Winning MT)
35,408342,432
Change in Quantity Sold on GDT
over same period last year
24.9%15. 1%
Weighted Average Product Price
(USD/MT)
2,8512,937
Change in Weighted Average
Product Price over same period
last year
(8.4%)(9.4%)
Change in Weighted Average
Product Price from previous event
3.9%–
Fonterra GDT Results
This chart shows Fonterra
GDT prices and volumes over
the past 12 months.

Fonterra Strategic Platforms
Ingredients
The Ingredients platform
comprises bulk and specialty
dairy products such as milk
powders, dairy fats, cheese
and proteins manufactured
in New Zealand, Australia,
Europe and Latin America, or
sourced through our global
network, and sold to food
producers and distributors in
over 140 countries.
It also includes Fonterra
Farm Source™ retail stores.
Consumer
The Consumer platform
comprises branded
consumer products, such
as powders, yoghurt, milk,
butter, and cheese. Base
products are sourced from
the ingredients business
and manufactured into
higher-value consumer
dairy products.
Foodservice
The Foodservice platform
comprises a range of
branded products and
solutions for commercial
kitchens, including bakery
butter, culinary creams,
and cheeses.
China Farms
The China Farms platform
comprises the farming
operations in China, which
produce high quality fresh
milk for the Chinese market.
11
AMF
Anhydrous Milk Fat.
BMP
Butter Milk Powder.
DIRA
Dairy Industry Restructuring
Act 2001 (New Zealand).
Farmgate Milk Price
The price for milk supplied in
New Zealand to Fonterra by
farmer shareholders.
Fluid and Fresh Dairy
The Fonterra grouping
of fluid milk products
(skim milk, whole milk
and cream – pasteurised
or UHT processed),
concentrated milk products
(evaporated milk and
sweetened condensed milk)
and yoghurt.
GDT
Global Dairy Trade, the
online provider of the twice
monthly global auctions of
dairy ingredients.
kgMS
Kilogram of milk solids, the
measure of the amount of
fat and protein in the milk
supplied to Fonterra.
LME (Liquid Milk
Equivalent)
A standard measure of the
amount of milk (in litres)
allocated to each product
based on the amount of fat
and protein (“milk solids”) in
the product relative to the
amount of fat and protein in
a standardised raw milk.
Non-Reference Products
All dairy products, except
for Reference Products,
produced by the NZ
Ingredients business.
Reference Products
The dairy products used
in the calculation of the
Farmgate Milk Price, which
are currently WMP, SMP,
BMP, butter and AMF.
Season
New Zealand: A period
of 12 months to 31 May
in each year.
Australia: A period of
12 months to 30 June
in each year.
SMP
Skim Milk Powder.
WMP
Whole Milk Powder.

GLOSSARY