Fonterra provides milk price and performance updates

5 December 2019


Fonterra lifts its Farmgate Milk Price and updates on its business performance

Today Fonterra announces an increased forecast Farmgate Milk Price, reports a strong start to the 2020
financial year and points to some of the challenges it is facing.

Fonterra Chairman John Monaghan says the Co-op has continued to earn good prices for its milk and as
a result has increased the mid-point of its forecast Farmgate Milk Price range by 25 cents to $7.30 per
kgMS.

“The higher price reflects a global dairy market that is tipped slightly in favour of demand.

“Our New Zealand milk production is forecast to be up 0.5% on last year. Annual milk production in the
other key global supply regions of the US and EU are both growing at less than 1%.

“On the demand side, Global Dairy Trade prices have increased by about 6% since our previous forecast.
Whole milk powder (WMP) prices, a key driver of our milk price, have hit their highest level since
December 2016.

“At this stage of the year, we have contracted a good proportion of our sales book and that gives us the
confidence to increase the mid-point of our forecast Farmgate Milk Price range by 25 cents.

“Farmers will welcome what would be the fourth highest milk price in our history. It represents a $11.2
billion cash injection into our communities.”

The forecast Farmgate Milk Price range is now $7.00-$7.60 per kgMS.

Fonterra CEO Miles Hurrell says that the Co-operative has made good progress moving to its new
strategy and has had a strong first quarter.

“When we announced our strategy in September, we said there were three things that were most
important to us: caring for people and making a positive impact on society (Healthy People), working
together to achieve a healthy environment for farming and society (Healthy Environment) and delivering
sustainable business results (Healthy Business). We are making good progress across all three areas.

“From a Healthy Business perspective, we are clear on the steps we need to take this year to hit our
medium and long-term targets. A focus is still reducing our debt, so it is no more than 3.75 times our
earnings. This will require us to achieve a gross margin of $3 billion, further reduce operating expenditure,
lower capital expenditure by $100 million to $500 million, and also divest some more assets.

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

“So far this year we have:
• Improved the underlying financial performance of the business, delivering a gross margin of $740
million, up from $646 million;
• Continued the focus on financial discipline, reducing operating expenditure by $104 million and
managing capital expenditure carefully;
• Generated a normalised Earnings Before Interest and Tax (EBIT) of $171 million, up $145 million,
and a reported EBIT of $259 million, up $233 million; and
• Improved our free cash flow (cash generated from our business available to reduce debt and pay
interest and dividends) by $595 million compared to last year.

“I’m pleased to see this level of improvement. Our people are doing a great job at putting our strategy into
action. There’s more to do but the wheels are definitely in motion.

“When we look out across the year at our financial performance, the biggest pressure on our earnings is
going to be the rising milk price. Stronger than forecasted performance from our Foodservice business
has helped offset the higher milk price to date and we will need to be very focused around making
improvements in other areas too.

“There will also be some markets that have difficult trading conditions over the course of the year. These
currently include Chile and Hong Kong where we are starting to see the ongoing civil unrest impact our
sales.”

Fonterra’s normalised earnings guidance for the 2020 financial year remains at 15-25 cents per share.
This reflects the underlying performance of the business.

Fonterra expects there to be several one-off adjustments (for example, the divestments of assets) that will
impact reported earnings, and this will be reported as required. Fonterra will provide details of the overall
impact of all one-offs on its earnings as part of its full-year financial statements.

Healthy Business

Mr Hurrell says the focus on value and continued financial discipline drove good results across the
business in the first quarter.

“Our teams have worked hard and this is reflected in both our normalised and reported EBIT,” he says.
Fonterra’s reported EBIT in the first quarter included positive one-off items such as the proceeds from the
sale of its interest in foodspring® and the revaluation of Beingmate shares.

During Q1, Fonterra’s Ingredients business increased its EBIT by $32 million to $139 million.

Mr Hurrell says that the New Zealand Ingredients business continued to contribute a large proportion of
the Co-op’s earnings and most of the earnings from the Ingredients business, which very much validates
the focus on New Zealand milk in the new strategy.

“We achieved strong gross margins from our New Zealand manufactured ingredients. We are also making
good progress in addressing the significant challenges in our Australia and Chile Ingredients businesses.

“The Australian Ingredients team, in particular, has continued to tackle their new norm of drought
conditions and related increased competition for milk supply, by manufacturing and selling a more
profitable product mix and reducing operating expenses. Their hard work is helping balance out
Australia’s lower milk volumes.”

EBIT from the Consumer and Foodservice business was $118 million in the first quarter, up by $56 million
compared to the same period last year, with improvements across all regions.

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

“The Australia Consumer business has delivered record market share in the chilled spreads category, and
we are starting to see early signs of a turnaround in our New Zealand Consumer business,” says Mr
Hurrell.

“The lift in China Foodservice sales in the fourth quarter of last year has continued into the first quarter of
the year. Sales volumes were up 43% and gross margins were up $23 million in the first quarter on a
year-on-year basis. We have entered a further 24 cities taking the total to 327, successfully marketed our
Anchor Food Professionals range for use in local cuisines, and continued to see strong growth in Chinese
bakeries and beverages.”

Healthy People

The Co-operative’s early priority in the 2020 financial year has been to get itself in shape to best deliver
the strategy.

Mr Hurrell says that during the first quarter, Fonterra moved to a new customer-led organisational
structure which allows it to be closer to its customers but also to live within its means.

“Like in any restructure, making these changes has been tough on our people – it’s never going to be
easy, especially when it means a period of uncertainty and having to lose some great people from the Co-
op. I acknowledge this and want to thank our people for their patience and understanding as we have
gone through this together.

“We’re now set up to take a more customer-centric approach in our business decisions which helps our in-
market teams drive demand for our farmers’ milk.

“Our focus from here is to keep building a culture which can deliver consistent results, one that has
employees proud to work for Fonterra and farmers proud to supply their milk to the Co-op.”

Healthy Environment

During the first quarter, Fonterra hit a number of important milestones towards a transition to a more
sustainable way of dairying.

Mr Hurrell says the most significant was the announcement, alongside other members of the primary
sector, to work with the Government to plan how to support farmers to make necessary changes to help
meet New Zealand’s international climate change obligations while maintaining profitability.

“We have also launched a new partnership, Plant for Good, to help farmers with on-farm native planting.
This will allow farmers to more effectively deliver the riparian planting actions identified in many of their
Farm Environmental Plans, which 25% of farms that supply milk to us now have – up from 23% at the end
of July.

“To help reduce plastic packaging and waste going to landfill, we’ve started offering Fonterra Milk For
Schools in a 1-litre format. It doesn’t use straws or plastic wrapping like the 200ml format does, and it’s
not single-serve. It also allows schools to minimise milk wastage by having more control over serving
size.”

-ENDS-
For further information contact:

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

---

5 DECEMBER 2019

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 are not 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 securities in Fonterra or the Fonterra Shareholders’ Fund.
2

¹
3
•Good progress moving to our new strategy and reporting on a
triple bottom line basis
•Increased and narrowed forecast Farmgate Milk Price range to
$7.00 -$7.60 per kgMS from $6.55 -$7.55 per kgMS
•Normalised EBIT of $171 million, up $145 million. Ingredients up
$32 million, and Consumer and Foodservice up $56 million
•Reported EBIT of $259 million, up $233 million. Positive one-off
items include $64 million from the gain on sale of foodspring™
and $22 million from Beingmaterevaluation³
•Continued financial discipline, operating expenses down
$104million and free cash flow improved $595 million
•Earnings guidance maintained, but there are increasing
pressures from higher milk prices
1.Previouslysharedfullyearkeymetrics,suchasReturnonCapital,willbeprovidedatfinancialyearend.
2.FreeCashFlow(FCF)isnetcashflowsfromoperatingactivitieslesscashflowsfrominvestingactivities,andincludes
proceedsreceivedfromdivestments.FCFrepresentstheamountavailabletopayinterest,dividendsandreducedebt.
3.Beingmateisclassifiedas‘heldfortrading’.Theinvestmentisrecordedatfairvalue,withchangesinfairvaluerecordedin
profitorloss.Fairvalueiscalculatedasthequotedsharepriceatendofquarter,multipliedbynumberofsharesheld.
FARMGATE
MILK PRICE
per kgMS
from $26m
NORMALISED
EBIT
million
FREE
CASH FLOW²
from $(1,245)m
million
from $26m
REPORTED
EBIT
million

201920202019202020192020201920202019202020192020
From $26m
²³
²²⁴
Gross MarginEBITGross MarginEBITGross MarginEBIT
From $3.8bn
billion
REVENUE
From $646m
million
GROSS
MARGIN¹
From $656m
million
OPERATING
EXPENSES¹
From $26m
million
EBIT¹
million
REPORTED
EBIT
4
1.Normalisedbasis.
2.Normalisedbasisanddoesnotaddtototalgroupduetoincludinginter-segmentsales.
3.ReportingofIngredients’sellingChinaFarm’smilkonbehalfofChinaFarmswasrevisedinFY20tobereportedinthe
ChinaFarmssegment.Onacomparablebasis,FY19Ingredients’grossmarginandEBITdisplayedwouldincrease
$4millionforthe3-monthperiod.
4.Providesend-to-endperspective,comprisingChinaFarmssegmentplusfinancialsfromConsumerandFoodservicerelated
salesofmilkfromChinaFarms.FY19alsoincludesfinancialsfromIngredientsrelatedsalesofmilkfromChinaFarms.
Note: EBIT and gross margin are in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a
comparative.

•Reduced the added sugar
in Fresh‘nFruity by 40%
on average
•Celebrated KickStart
Breakfast’s 10
th
anniversary –one of the
ways we’re improving the
health of our communities
•New customer-led
organisational structure
now in place
•On-track to contribute
approximately $11.2 billion¹
into regional New Zealand
this year through the
MilkPrice
1.Calculatedasthemid-pointofthecurrentannouncedFarmgateMilkPriceforecastrangemultipliedbythetotalforecastedNewZealandmilksolidscollectedbyFonterra.

•Working with the Government on
how we incentivise and support
farmers to make changes to meet
New Zealand’s international
climate change obligations while
maintaining profitability
•Launched a new partnership,
Plant for Good, to reduce the
cost of on-farm native planting
•25% of farms now have Farm
Environment Plans (up from
23% at end of FY19)
•Offering Fonterra Milk for
Schools in 1-litre format to help
reduce plastic packaging and
waste going to landfill

7
•Forecast Farmgate Milk Price has been increased and
narrowed in range to $7.00 -$7.60 from $6.55 -$7.55
per kgMS, based on:
•Strong global demand
•Stable global milk supply
•Downside risk remains from a weakening renminbi,
which tends to reduce Chinese consumer purchasing
power for USD-priced dairy products
•Normalised earnings per share range of
15-25 cents maintained
•Risks to earnings include:
•Higher milk prices
•Difficult trading conditions in Chile and Hong Kong
•Continued drought conditions and related
competition challenges for Australian Ingredients
per kgMS
Forecast Farmgate Milk Price
cents
per share
Forecast Normalised Earnings

8

-
10
20
30
40
50
60
70
80
90
JunJulAugSepOctNovDecJanFebMarAprMay
•Season to date collection, June –October,
was 524.7 million kgMS, down 0.5% on
lastseason
•Peak volume impacted by adverse weather
conditions across a number of regions in
New Zealand
•Full year forecast is up 0.5% on the prior
season:
•FY19 collections were adversely
impacted by weather during February
to April
•FY20 is currently forecast to reflect
historical norms for February to April
Season
Total Milk Solids
(kgMS)
Peak Day
Milk
2017/181,505m (down 1%)82m litres
2018/191,523m (up 1%)85m litres
2019/20F1,530m (up 0.5%)83m litres
9
Volume (m litres/day)

Q1Q2Q3Q4
2019
2020
¹
∆²
Volume³ (‘000 MT)5215669%
Revenue ($)3,0093,36412%
Gross Margin ($)27332820%
Gross Margin (%)9.1%9.8%
Other⁴36(8)
Operating Expenses ($)(202)(181)(10)%
EBIT ($)10713930%
•Sales volume up 9%, due to New Zealand Ingredients benefiting
from strong early demand relative to FY19 sales plan that was
weighted to second quarter
•New Zealand Ingredients’ gross margin up $39 million, mainly
due to increased sales volume
•Prolesur’sand Australia Ingredients’ gross margins increased $9
million and $8 million respectively, due to improved product mix
and pricing
•Australia continues to be impacted by challenging conditions
•‘Other’ decreased $44 million, and this included the removal of
DFE income
•Ingredients’ EBIT up $32 million due to improved performance in
Australia and Chile. New Zealand in line with last year
1.Reporting of Ingredients’ selling China Farm’s milk on behalf of China Farms was revised in FY20 to be reported in
the China Farms segment. On a comparable basis, the following FY19 figures above would change; revenue
$54million decrease, operating expenses $0.4 million decrease, gross margin and EBIT $4 million increase.
2.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of reported figures.
3.Includes sales to other strategic platforms.
4.Includes other Income, net foreign exchange gain/(loss) and share of equity accounted investees.
5.Summing of EBIT margin figures may not add up to total EBIT displayed in table above due to rounding.
Note: EBIT and gross margin are in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a
comparative. Numerical or percentage changes are expressed relative to the first quarter ofFY19.
EBIT by Quarter⁵
10

20192020
20192020
20192020
000 MT
From 83,000 MT
From 1.9%
000 MT
From 32,000 MT
Volume¹
000 MT
From 471,000 MT
Gross Margin
From 9.4%
11
$ million
1.Includes sales to other strategic platforms.Note: EBIT and gross margin are in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a
comparative. Numericalor percentage changes are expressed relative to the first quarter ofFY19.
Sum of individual numbers from the regional and divisional breakdown may not add to the totals in each category due
torounding.
Gross MarginGross MarginGross Margin

1.Includes bulk liquid milk.
Note: Reference products are products used in the calculation of the Farmgate Milk Price –WMP, SMP, BMP, Butter and AMF.
12
Q1 FY19Q2 FY19Q3 FY19Q4 FY19Q1 FY20
Change
Q1 FY19
to Q1 FY20
Production Volume¹ (‘000 MT)
Reference633713 440 94607(4)%
Non-Reference227258210722364%
SalesVolume(‘000 MT)
Reference24767853540529118%
Non-Reference15923023322617812%
Revenue ($ per MT)
Reference5,2574,439 4,539 5,1885,2891%
Non-Reference5,4055,469 5,238 6,0555,6795%

Q1Q2Q3Q4
2019
2020
•Sales volume increased 3%, largely due to Foodservice growth
in Greater China from application development and
cityexpansion
•Revenue and gross margin up $84 million and $16 million,
mainly due to improved Foodservice product mix and pricing
•Operating expenses down $51 million
•Consumer and Foodservice EBIT up $56 million:
•Consumer up $22 million, due to reduced
operatingexpenses
•Foodservice up $35 million, due to improved sales volume
and focus on higher gross margin product
∆¹
Volume²
,
(‘000 MT)4314443%
Revenue ($)1,7041,7885%
Gross Margin ($)3904064%
Gross Margin (%)22.9%22.7%
Other³3(8)
Operating Expenses ($)(331)(280)15%
EBIT ($)6211889%
13
EBIT by Quarter⁴
1.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of reported figures.
2.Includes sales to other strategic platforms.
3.Includes Other Income, net foreign exchange gain/(loss) and share of equity accounted investees.
4.Summing of quarterly EBIT figures may not add up to total EBIT displayed in table above due torounding.
Note: EBIT and gross margin are in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a
comparative. Numerical or percentage changes are expressed relative to the first quarter ofFY19.

000 MT
From 137,000 MT
From 28.4%
000 MT
From 72,000 MT
From 22.6%
000 MT
From 158,000 MT
From 19.1%
Volume¹
000 MT
From 65,000 MT
Gross Margin
From 23.6%
1.Includes sales to other strategic platforms.Note:
EBIT and gross margin are in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a
comparative. Numerical or percentage changes are expressed relative to the first quarter ofFY19.
Sum of individual numbers from the regional and divisional breakdown may not add to the totals in each category due
torounding.
$ million
2019202020192020
Gross MarginEBITGross MarginEBITGross MarginEBITGross MarginEBIT
20192020201920202019202020192020
2019202020192020
14

15
¹
∆²
Volume³ (‘000 MT)93114
22%
Revenue ($)515617
20%
Gross Margin ($)79115
45%
Gross Margin (%)15.4%18.7%
Other⁴(1)(0)
Operating Expenses ($)(54)(56)(3)%
EBIT ($)2459146%
Q1Q2Q3Q4
2019
2020
•Sales volume up 22% due to Greater China:
•Continual dairy upgrade applications across beverage,
bakery and Italian kitchen channel
•China city expansion, now in 327 cities compared to 303
cities at the end of FY19
•Gross margin up $36 million, and gross margin percentage
increased from 15.4% to 18.7% due to:
•Strong demand in Mainland China’s and Philippines’
bakery channels
•Improved pricing in Indonesia, and focus on high
marginproducts
•Operating expenses increased slightly due to growth in
GreaterChina
•EBIT increased $35 million due to improved gross margin
EBIT by Quarter⁵
1.Individual Consumer and Foodservice tables may not align to combined Consumer and Foodservice table due to
rounding.
2.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of reported figures.
3.Includes sales to other strategic platforms.
4.Includes Other Income, net foreign exchange gain/(loss) and share of equity accounted investees.
5.Summing of quarterly EBIT figures may not add up to total EBIT displayed in table above due torounding.
Note: EBIT and gross margin are in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a
comparative. Numerical or percentage changes are expressed relative to the first quarter ofFY19.

000 MT
From 8,000 MT
From 22.2%
000 MT
From 21,000 MT
From 8.8%
000 MT
From 24,000 MT
From 17.8%
Volume¹
000 MT
From 40,000 MT
Gross Margin
From 17.4%
20192020
20192020
20192020
20192020
16
$ million
Gross Margin
Gross MarginGross MarginGross Margin
1.Includes sales to other strategic platforms.Note:
Figures presented are for the first quarter of FY20, and FY19 as a comparative. Numerical or percentage changes are
expressed relative to the first quarter performance ofFY19.
Sum of individual numbers from the regional and divisional breakdown may not add to the totals in each category due to
rounding.

Q1Q2Q3Q4
2019
2020
EBIT by Quarter⁵
¹
∆²
Volume³ (‘000 MT)338330(2)%
Revenue ($)1,1891,171(1)%
Gross Margin ($)310291(6)%
Gross Margin (%)26.1%24.8%
Other⁴4(8)
Operating Expenses ($)(277)(224)19%
EBIT ($)375958%
1.Individual Consumer and Foodservice tables may not align to combined Consumer and Foodservice table due to
rounding.
2.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of reported figures.
3.Includes sales to other strategic platforms.
4.Includes Other Income, net foreign exchange gain/(loss) and share of equity accounted investees.
5.Summing of quarterly EBIT figures may not add up to total EBIT displayed in table above due torounding.
Note: EBIT is in NZD millions. Figures presented are for the first quarter of FY20, and FY19 as a comparative.
Numerical or percentage changes are expressed relative to the first quarter ofFY19.
•Small decline in sales volume across all regions
•Gross margin declined $19 million mainly due to:
•Removal of Tip Top following divestment
•Ongoing disruption in Hong Kong
•Latin America gross margin flat on comparable period:
•DPA Brazil benefiting from increased demand for premium
yoghurt and desserts in an improving economy
•Offset by Soprolegross margin impacted by increased
milk costs
•Reduced operating expenses in all regions, down $53 million:
•Approximately half from Oceania, which included removal
of Tip Top following sale
•Consumer EBIT increased $22 million due to improved
operating expenses
17

Volume¹
000 MT
From 25,000 MT
Gross Margin
From 36.3%
000 MT
From 51,000 MT
From 28.5%
000 MT
From 129,000 MT
From 29.0%
000 MT
From 134,000 MT
From 19.4%
20192020
20192020
20192020
20192020
1.Includes sales to other strategic platforms.Note:
Figures presented are for the first quarter of FY20, and FY19 as a comparative. Numerical or percentage changes are
expressed relative to the first quarter performance ofFY19.
Sum of individual numbers from the regional and divisional breakdown may not add to the totals in each category due to
rounding.
18
$ million
Gross Margin
Gross MarginGross MarginGross Margin

19
¹
∆²
Volume³ (‘000 MT)4518%
Revenue ($)547029%
Gross Margin⁴($)(2)6340%
Gross Margin (%)(4.2)%7.9%
Operating Expenses⁴($)(13)(6)54%
Other⁴
,
⁵($)(4)(7)
China Farms EBIT⁶($)(19)(8)60%
End-to-End EBIT Perspective
Ingredients EBIT ($)(4)–
Consumer and Foodservice
EBIT⁷($)
02577%
China Farms End-to-End⁸($)(23)(6)74%
1.Reporting of Ingredients’ selling China Farm’s milk on behalf of China Farms was revised in FY20 to be reported in
the China Farms segment. On a comparable basis, the following FY19 figures above would change; revenue $0.3
million increase, operating expenses $0.4 million decrease, gross margin and EBIT $4 million decrease.
2.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of reported figures.
3.Includes sales to other strategic platforms.
4.Fonterra-owned farms in the China Farms business segment.
5.Includes Other Income, net foreign exchange gain/(loss) and share of equity accounted investees.
6.Includes Fonterra-owned farms and the joint venture farms.
7.EBIT impact of milk from China Farms sold by Consumer and Foodservice businesses.
8.Provides end-to-end perspective, comprising China Farms segment plus financials from Consumer and Foodservice
related sales of milk from China Farms.
Note: Figures presented are for the first quarter of FY20, and FY19 as a comparative. Numerical or percentage changes
are expressed relative to the first quarter performance ofFY19.
•Sales volume increased 18% due to higher productivity, feed
management and recovery from flood in Yutian
•Gross margin up $8 million due to increased sales volume and
improved pricing from stronger market demand
•Operating expenses down $7 million with continued cost focus
•At EBIT level, loss decreased from $19 million to $8 million:
•Fonterra-owned farming hubs EBIT up $19 million, from
$(15) million to now slightly above breakeven, but offset by
•Joint venture farm hub losses increased from $(4) million
last year to $(8) million
•Continued improvement in the average price received for our
milk, 64% of our revenue was from milk sold for more than
RMB4 versus 46% in 2019

595625536521566
433
465
432
431
444
20162017201820192020
Consumer & FoodserviceIngredients
632
621
636
656
552
20162017201820192020
Opex ($ million)
¹
3.6
3.8
4.0
3.8
4.3
20162017201820192020
Revenue ($ billion)
821
841
660
646
740
20162017201820192020
GM ($ million)
211
252
72
26
171
20162017201820192020
EBIT ($ million)
1.Does not add to total due to inter-group eliminations.
20
945
930
805
773
830
169
(610)
(671)
(1,245)
(650)
20162017201820192020
Free Cash Flow ($ million)

21
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
Gearing ratio is economic net interest bearing debt
divided by total capital. Total capital is equity
excluding the hedge reserves, plus economic net
interest bearing debt.
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
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

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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.