Fonterra reports its Interim Results

Fonterra Co-operative Group Page 1

Results for Announcement to the Market
Results for announcement to the market
Name of issuer
Fonterra Co-operative Group Limited
Reporting Period 6 months to 31 January 2022
Previous Reporting Period 6 months to 31 January 2021
Currency NZD

Amount (m’s) Percentage change
Revenue from continuing operations $10,588 10%
Total Revenue $10,797 9%
Net profit/(loss) from continuing operations $371 9%
Total net profit/(loss) $364 (7)%
Interim Dividend
Amount per Quoted Equity Security $0.05
Imputed amount per Quoted Equity Security Not Applicable
Record Date 24/03/2022
Dividend Payment Date 14/04/2022
Current period Prior comparable period
Net tangible assets per Quoted Equity
Security
$2.72 $3.07
A brief explanation of any of the figures
above necessary to enable the figures to be
understood
Please refer to the interim financial statements for further
explanation.
Authority for this announcement
Name of person authorised to make this
announcement
Anya Wicks
Contact person for this announcement Anya Wicks
Contact phone number (09) 374 9341
Contact email address anya.wicks@fonterra.com
Date of release through MAP 17/03/2022
Unaudited interim financial statements accompany this announcement.

---

17 March 2022

Fonterra reports its Interim Results

• Total Group Revenue: NZ$10,797 million, up 9%
• Reported Profit After Tax NZ$364 million, down 7%
• Normalised Profit After Tax: NZ$364 million, down 13%
• Total Group normalised EBIT: NZ$607 million, down 11%
• Net Debt: NZ$5.6 billion, down 8%
• Total Group normalised Gross Profit: NZ$1,607 million, down 7%
• Total Group normalised Gross Margin: 14.9% down from 17.4%
• Total Group Operating Expenditure: NZ$1,062 million, up 1%
• Normalised Africa, Middle East, Europe, North Asia, Americas (AMENA)
EBIT: NZ $250 million, up 25%
• Normalised Greater China EBIT: NZ$236 million, down 20%
• Normalised Asia Pacific (APAC) EBIT: NZ$158 million, down 33%
• Full year forecast normalised earnings per share: 25 - 35 cents per share
• Interim Dividend: 5 cents per share
• Forecast Farmgate Milk Price range: NZ$9.30 - $9.90 per kgMS
• Forecast milk collections: 1,480 million kgMS, down 3.8%

Fonterra Co-operative Group Limited today announced its 2022 Interim Results which show the Co-op
has delivered a half year Profit After Tax of NZ$364 million, a Total Group normalised EBIT of NZ$607
million, and a decision to pay an interim dividend of 5 cents alongside a record high forecast Farmgate
Milk Price.

Fonterra CEO Miles Hurrell says the Co-op’s results for the first half of the financial year show it is
performing well, while creating the momentum needed to achieve its 2030 targets.

“The world wants nutritious, sustainably produced dairy and that’s what we do well. We have continued to
see strong demand for our products across multiple markets at a time of constrained supply.

“Our earnings have been achieved at a time when our input costs have been significantly higher with the
average cost of milk up almost 30% on the same time last year. This shows we’re performing well even
with a high Farmgate Milk Price.

“The Board’s decision to pay an interim dividend will be welcome news for our unit holders and farmer
owners.

“The milk price is also good news for our farmer owners and the New Zealand economy - a midpoint of
NZ$9.60 would see the Co-op inject over $14 billion into our local communities through milk price
payments alone.

“COVID-19 continues to be a challenge in our markets and here at home. We’re seeing more of our
employees having to isolate and continued disruptions in our supply chain.

Fonterra Co-operative Group
Page 2

“However, by caring for our people and good management and planning, our manufacturing plants have
continued to operate and we are getting products to our customers.”

Commenting on the Co-op’s long-term strategy, Mr Hurrell says it’s been six months since the Co-op
announced it and while it’s early days, the shift from reset to growth is well underway.

“This would not be possible without the hard work of our farmer owners and employees, and I want to
thank them for their commitment and support.”

Performance
From a performance perspective, Mr Hurrell says the Co-op delivered a Profit After Tax of NZ$364 million,
down $27 million on the same time last year, and a Total Group normalised EBIT of NZ$607 million, down
$77 million, reflecting the significantly higher milk price.

“Margins in our Ingredients channel improved in the first half. However, the higher milk price put pressure
on our margins in Foodservice and Consumer, and we also felt the impact of COVID-19 in many of our
markets. Lower New Zealand milk collections reduced our total production and this impacted our overall
sales volumes.

“Despite these challenges, AMENA had a stronger start to the year. Our teams across AMENA delivered
a 25% increase in normalised EBIT to $250 million. This was driven by improved performance in our Chile
business and increased sales of higher value ingredients, used in products such as high protein snack
bars and ready-to-drink medical nutrition beverages.

“In Greater China, we have continued to see firm demand for dairy as our team finds new ways to drive
demand. Ingredients benefited from strong demand and good margins. However, normalised EBIT is
down 20% to $236 million, particularly in Foodservice where, despite steady volumes, the higher milk
price impacted gross margins.

“APAC’s normalised EBIT decreased by 33% to $158 million. While gross margins in our Ingredients
channel improved, this was more than offset by the higher cost of milk which impacted gross margins in
both Consumer and Foodservice, particularly in our South East Asia and New Zealand businesses.”

Mr Hurrell says the Co-op has continued its focus on financial discipline and reducing debt.

“Our net debt is down 8% on the same period to $5.6 billion and our Gearing Ratio is now 44.1% versus
47.3% last year. As is usual at this time of the year, these figures reflect the seasonal peak. We expect
further reductions in debt and gearing by the end of the financial year.

“At $1,062 million, our Total Group Operating Expenses are tracking more or less in line with last year,
despite inflationary pressures and on-going disruption from COVID-19.”

The record date for the payment of the 5 cent dividend is 24 March 2022, and the payment date is 14 April
2022.

Strategy
Commenting on the Co-op’s strategy, Mr Hurrell says it’s early days, but through the Co-op’s strategic
choices to focus on New Zealand milk, be a leader in sustainability and be a leader in dairy innovation and
science, it is putting in place the necessary building blocks to grow Foodservice, strengthen its Consumer
channel and move towards higher value products in Ingredients.

Focus on New Zealand milk
“Our new ‘Flexible Shareholding’ capital structure will be critical in helping us maintain a sustainable New
Zealand milk supply in an increasingly competitive environment.

“Following the successful farmer vote, we are continuing to work with the Government on a regulatory
framework which supports the structure. These discussions are progressing well. “While we don’t have a
firm date for when regulatory changes will be made, we expect to be able to provide a timeline for farmers
in the next couple of months.

Fonterra Co-operative Group
Page 3

“We are also continuing to make progress on the divestment of our Chilean business and the ownership
review of our Australian business.

“Both Soprole and Fonterra Australia are performing well and our priority is to maximise the value of both
businesses to the Co-op.

“We will take our time to ensure the best outcomes from these processes and remain confident on
delivering on our intention to return around $1 billion of capital to our shareholders and unit holders by
FY24.

“Our teams are always looking to drive demand for New Zealand milk by developing new ways of using
our products in local cuisine to find the next big food trend.

“In Greater China, using the power of social media, the team promoted the idea of mozzarella on
dumplings. The dish gained huge attention and sparked a new trend in the lead up to the Lunar New
Year.

“In the Middle East, our team launched Red Cow - a more affordable range of products we sell direct to
customers, such as bakeries, to help us capture a greater share of the foodservice market.

Be a leader in dairy innovation and science
“We continue to develop new dairy innovations to help customers as they look to nutrition solutions to help
them live longer and healthier lives.

“Through our transformative dairy science collaboration with VitaKey we are aiming to further unlock the
benefits of our probiotic strains.

“VitaKey specialises in precision delivery of nutrition which would allow us to design dairy products that
incorporate targeted and time-controlled release of specific dairy nutrients in a way that allows the
nutrients to be more beneficial in our bodies.

“The project is ahead of schedule and we’ve expanded the scope to include several micronutrients, such
as Vitamin D.

“Meanwhile, in the area of nutrition science solutions, we are continuing our work to understand this
health and wellness trend and where we can build a competitive advantage.”

Be a leader in sustainability
Mr Hurrell says by continuing to invest in sustainability, the Co-op will ensure its milk is backed by the
sustainability credentials consumers want and it will be better able to support its customers in their
sustainability journey.

“This is why we have an aspiration to be net zero by 2050, and over the next decade we intend to invest
around $1 billion in sustainability initiatives to support that.

“Finding a solution to the methane challenge will be a gamechanger. That’s why the results of the next
phase in the Kowbucha™ trials - a probiotic which could switch off the bugs that create methane in cows -
are so exciting. After moving from the lab to farm, initial results have shown a reduction in methane of up
to 20% when fed to calves. The trial is now continuing to the next phase.”

Mr Hurrell says the Co-op’s focus on sustainability is gaining recognition and helping to maintain and win
business.

“Our NZMP Organic Butter – carbonzero™ certified, developed to help our customers achieve their own
sustainability goals, has been recognised internationally, winning two innovation awards.

“Our low carbon milk and sustainability credentials have recently helped us retain business in our
Foodservice channel. Like us, one of our Quick Service Restaurant customers has a goal to be net zero

Fonterra Co-operative Group
Page 4

by 2050. By simply using our products over a competitor’s, they’ve been able to reduce their carbon
emissions by the equivalent of taking 1,760 cars off the road.”

FY22 Outlook
Commenting on the second half of the year, Mr Hurrell says the forecast Farmgate Milk Price range of
$9.30 - $9.90 per kgMS and forecast normalised earnings guidance of 25 – 35 cents per share remain
unchanged.

“While the milk price is at a record high, pricing in our Ingredients business, for both reference and non-
reference products, has been supportive of both milk price and earnings and we expect this to continue in
the second half.

“In the medium term, we expect the supply and demand outlook to go some way towards underpinning a
strong milk price next season.

“There are a number of risks we are continuing to watch closely. The conflict in Ukraine has added to an
already complex COVID-19 operating environment, impacting global supply chains, oil prices and the
global supply of grain.

“However, our lower debt levels mean we are in a stronger position to weather the heightened levels of
uncertainty and market volatility the world faces right now.

“We will also continue to use our Co-op’s scale to ensure we are putting our Co-op’s milk into the products
and places where we can deliver the most value under the circumstances.”

ENDS
Non-GAAP financial information
Fonterra uses several non-GAAP measures when discussing financial performance. Non-GAAP measures are not
defined or specified by NZ IFRS.
Management believes that these measures provide useful information as they provide valuable insight on the
underlying performance of the business. They may be used internally to evaluate the underlying performance of
business units and to analyse trends. These measures are not uniformly defined or utilised by all companies.
Accordingly, these measures may not be comparable with similarly titled measures used by other companies. Non-
GAAP financial measures should not be viewed in isolation nor considered as a substitute for measures reported in
accordance with NZ IFRS. Non-GAAP measures are not subject to audit unless they are included in Fonterra’s
audited annual financial statements.
Please refer to the non-GAAP measures section in Fonterra’s 2022 Interim Report for reconciliation of NZ IFRS to
non-GAAP measures, and the Glossary for definitions of non-GAAP measures referred to by Fonterra.


For further information contact:

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

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Our three strategic
choices are guiding
everything we do
Focus on
New Zealand milk
We believe New Zealand milk is the most
valuable milk in the world due to our
grass-fed farming model, which means
our milk has a carbon footprint one third
the global average for milk production.
With New Zealand future milk supply
expected to decline or be flat at best,
we have an opportunity to create more
value for our farmer owners by further
differentiating our milk and its scarcity
in the global market.
Be a leader in
sustainability
Globally, people want to know
where their food comes from and
the environmental impact it leaves.
By leading in sustainability, we will
be better able to support our customers
and differentiate and grow our brands
across our markets.
Be a leader in dairy
innovation and science
Our Co-op has a long and proud heritage
of dairy innovation. We are building on
this and developing new dairy nutrition
solutions which aim to help people live
healthier and longer lives.
COVER IMAGE:
Alan & Te Kaihou, Bay of Plenty

Fonterra uses several non-GAAP measures when discussing financial performance.
Non-GAAP measures are not defined or specified by NZ IFRS.
Management believes that these measures provide useful information as they
provide valuable insight on the underlying performance of the business. They may
be used internally to evaluate the underlying performance of business units and to
analyse trends. These measures are not uniformly defined or utilised by all companies.
Accordingly, these measures may not be comparable with similarly titled measures
used by other companies. Non-GAAP financial measures should not be viewed in
isolation nor considered as a substitute for measures reported in accordance with
NZ IFRS. Non-GAAP measures are not subject to audit unless they are included in
Fonterra’s audited annual financial statements.
Please refer to the Non-GAAP measures section for reconciliations of NZ IFRS
to non-GAAP measures, and the Glossary for definitions of non-GAAP measures
referred to by Fonterra.
Contents
MESSAGE FROM OUR CHAIR AND CEO
04
OUR PROGRESS
08
BUSINESS PERFORMANCE
14
INTERIM FINANCIAL RESULTS
46
FINANCIAL STATEMENTS
48
NOTES TO THE FINANCIAL STATEMENTS
56
INDEPENDENT REVIEW REPORT
68
NON-GAAP MEASURES
69
GLOSSARY
71
FONTERRA INTERIM REPORT 2022

Margins in our Ingredients channel improved in the first half compared to
the same period last year. However, the higher milk price put pressure on
our margins in our Consumer and Foodservice channels, and we also felt
the impact of COVID-19 in many of our markets. Lower New Zealand milk
collections reduced our total production, and this impacted our overall
sales volumes.
Despite these challenges, Africa, Middle East, Europe, North Asia, Americas
(AMENA) have had a stronger start to the year, delivering a 25% increase in
normalised EBIT to $250 million.
In Greater China, we’ve continued to see strong demand for dairy as we’ve
found new ways to drive demand. However, normalised EBIT is down 20%
to $236 million and a big part of this is due to Foodservice where, despite
steady volumes, the higher milk price has impacted gross margins.
In Asia Pacific our normalised EBIT decreased by 33% to $158 million. While
gross margins in our Ingredients channel improved, this was more than offset
by the higher cost of milk which impacted gross margins in both Consumer
and Foodservice, particularly in South East Asia and New Zealand.
We have continued to focus on our financial discipline. Our Total Group
Operating Expenses are tracking more or less in line with last year despite
inflationary pressure and ongoing disruption from COVID-19. Our net debt is
down and our gearing ratio has improved.
We are pleased that our debt levels, along with our earnings so far this year,
support a decision to pay an interim dividend of 5 cents per share.
Outlook for the remainder of FY22
As we look out to the remainder of the year, the forecast Farmgate Milk Price
range of $9.30 – $9.90 per kgMS and forecast normalised earnings guidance
of 25 – 35 cents per share remains unchanged.
While the milk price is at a record high, pricing in our Ingredients channel,
for both reference and non-reference products, has been supportive of both
milk price and earnings and we expect this to continue in the second half.
However, there are a number of risks we are continuing to watch closely.
The conflict in Ukraine has added to an already complex COVID-19 operating
environment, impacting global supply chains, oil prices and the global supply
of grain.
Our lower debt levels mean we are in a stronger position to weather the
heightened levels of uncertainty and volatility the world faces right now.
We will also continue to use our Co-op’s scale to ensure we are putting our
Co-op’s milk into the products and places where we can deliver the most
value under the circumstances.
Kia ora
At the start of the 2022 financial year we set out our long-term strategy
and clear targets for the value we’re aiming to create over the next eight
years. We also shared our aspiration to be net zero with our emissions
by 2050.
To achieve these outcomes, we’ve made three important strategic
choices – to focus on creating value from New Zealand milk, be a leader
in sustainability and be a leader in dairy innovation and science.
These choices will help us navigate and make the most of the global macro-
trends and the realities of our local dairy industry.
We would like to thank our farmer owners and employees for their support
of the strategy, commitment to our Co-op and hard work to deliver for
our customers, despite the impact of COVID-19 on their lives at work and
at home. We’re making good progress in putting in place the necessary
buildings blocks for our 2030 targets.
First half of the 2022 Financial Year (FY22)
We have a record forecast Farmgate Milk Price range. At the current midpoint
of $9.60, it would see more than $14 billion injected into the New Zealand
economy – that’s about $2.5 billion more than last year. While it’s welcome
news, we’re also very aware that farmers are facing increasing costs on farm.
We knew this year was going to be more challenging for our earnings
due to the high forecast Farmgate Milk Price, which is up on average by
almost 30% year-on-year. As a result, we are pleased with our Profit After
Tax of $364 million, down $27 million and Total Group normalised EBIT of
$607 million, down $77 million. This shows we’re performing well even with
a high Farmgate Milk Price.
Message
from our
Chair and
CEO
Our debt levels, along with our
earnings so far this year, support a
decision to pay an interim dividend
of 5 cents per share.”
Miles Hurrell
– Chief Executive Officer
Peter McBride
– Chairman
0405
FONTERRA INTERIM REPORT 2022MESSAGE FROM OUR CHAIR & CEO

By continuing to invest in
sustainability, we’re making
sure our Co-op’s milk is
backed by the sustainability
credentials consumers want.”
Progress towards our 2030 targets
While our short-term financial performance is critical because it funds
our future, we also need to focus on our long-term targets and, as a result,
take action today that will pay off in the future. Across all three of our
strategic choices, we’re making good, solid progress.
Focus on New Zealand milk
Our new ‘Flexible Shareholding’ capital structure is critical in helping
us maintain a sustainable New Zealand milk supply in an increasingly
competitive environment. Following the successful farmer vote in December,
discussions with the Government are progressing well and we expect to be
able to provide a timeline for farmers in the next couple of months.
We’re also continuing to make progress on the divestment of our
Chilean business and the ownership review of our Australian business.
Both Soprole and Fonterra Australia are performing well and our priority is
to maximise the value of both businesses to our Co-op. We will take our time
to ensure the best outcomes from these processes and remain confident
on delivering on our intention to return around $1 billion of capital to our
shareholders and unit holders by FY24.
Our teams are always driving demand for New Zealand milk by
developing new ways of using our products in local cuisine to find the
next big food trend. During the first half, we saw Greater China promote
the idea of mozzarella on dumplings. The dish gained huge attention
and sparked a new trend in the lead up to the Lunar New Year. In the
Middle East, we launched Red Cow – a more affordable range of products
we sell direct to customers, such as bakeries, to help us capture a greater
share of the foodservice market.
Be a leader in dairy innovation and science
We continue to build on our heritage of dairy innovation, developing new
solutions to solve problems our customers face and help people live longer
and healthier lives. In doing so, we’re looking at new ways to commercialise
our IP.
The collaboration with VitaKey is a great example of how we may be able to
do this. VitaKey specialises in precision delivery of nutrition – an emerging
area of research that seeks to deliver the right nutrients, in the right amount,
to the right part of the body at the right time. We are working with them to
explore how we can apply their capability to specific dairy nutrients in a way
that allows the nutrients to be more active and beneficial in the body. This
started with two of our probiotics that are used to address digestive issues
and immunity and has now been expanded to include several micronutrients,
such as Vitamin D.
Meanwhile, in the area of nutrition science solutions, we are continuing our
work to understand this health and wellness trend and where we can build a
competitive advantage.
Be a leader in sustainability
By continuing to invest in sustainability, we’re making sure our Co-op’s
milk is backed by the sustainability credentials consumers want and will
be better able to support our customers in their sustainability journey.
Finding a solution to the methane challenge will be a gamechanger on
this front. That’s why the results of the next phase in the Kowbucha™
trials – a probiotic which could switch off the bugs that create methane in
cows – are so exciting. After moving from the lab to farm, initial results have
shown a reduction in methane of up to 20% when fed to calves. The trial is
now continuing to the next phase.
The Co-op’s focus on sustainability is helping to maintain and win business
and is also gaining recognition. The combination of New Zealand milk
having a carbon footprint one third the global average and our sustainability
credentials have also recently helped us retain business in our Foodservice
channel. Like us, one of our Quick Service Restaurant customers has a goal
to be net zero by 2050. By simply using our products over a competitor’s,
they’ve been able to reduce their carbon emissions by the equivalent of
taking 1,760 cars off the road.
Our NZMP Organic Butter – carbonzero™ certified, developed to help
our customers achieve their own sustainability goals, has been recognised
internationally, winning two significant innovation awards.
As we said earlier, it’s only early days on our long-term strategy – but we
are pleased with our results and progress so far this year. We have a record
high forecast milk price. We continue to face into COVID-19 and the various
geopolitical challenges impacting global markets. Given the significant
uncertainty we face, our Co-op is focused on what’s within our control,
working together to ensure we’re creating goodness for generations – you,
me, us together, tātou tātou.
Peter
Peter McBride Miles Hurrell
Chairman Chief Executive Officer
Total Group normalised EBIT
$607m
down 11%
2021/2022 Forecast
Farmgate Milk Price range
$9.30-$9.90
per kgMS
Reported Profit After Tax
$364m
down 7%
Interim dividend of
5 cents
per share
Net Debt
$5.6b
down 8%
0607
FONTERRA INTERIM REPORT 2022MESSAGE FROM OUR CHAIR & CEO

OUR CONTEXT
Our Co-op is performing
well today, while creating
the momentum needed to
achieve our 2030 targets.
Creating
goodness:
Our progress
so far
Focus on New Zealand Milk
Farmers support new capital structure
Our farmer shareholders voted in support of our new Flexible Shareholding
structure, with the proposal gaining more than 85% of the vote. This capital
structure enables our strategy, making it easier for farmers to join and stay
with the Co-op. It is critical to helping us maintain a sustainable supply of
New Zealand milk in an increasingly competitive environment, and one that
is rapidly changing due to factors such as environmental pressures, new
regulations and alternative land uses. Following the successful vote, we’re
continuing to work with the Government on a regulatory framework to
support the new structure.
Growing our Foodservice business
Growing our Foodservice business is a key part of our strategy. Our
Anchor Food Professionals (AFP) reached a milestone in October by
becoming a NZ$3 billion annual revenue business. AFP’s success is
down to our Co-op’s strong connection to our customers who value
our sustainably produced, high quality, nutritious milk and innovative
products.
Looking ahead to 2030, we’re aiming to shift more milk into our
Foodservice business and grow our presence across Greater China,
South East Asia and the USA.
Sparking new trends
in China
New consumers in another 18
cities in China are now enjoying
our products as we continue to
grow our Foodservice business,
bringing our total reach to 403
cities. Our team is always looking
to drive demand for New Zealand
milk by developing new ways of
using our products in local cuisine
to find the next big food trend.
Using the power of social media,
they promoted the idea of sprinkling
mozzarella on top of dumplings.
This gained huge attention for the
dish and sparked a new trend in the
lead up to Chinese New Year.
Growing our business in the Middle East
Foodservice is a growing channel in the Middle East. Our Anchor Food
Professionals is already an established premium brand, but to capture
a greater share of the market we launched Red Cow, a more affordable
range of products which we are selling direct to customers, such as
bakeries.
We also launched our Mainland cheese range in Dubai’s largest
supermarket chain. The range completely sold out, with customers
using social media sites to track down the cheese in-store. Our
in-region team is now looking at launching the range into other
countries.
Strengthening our
customer relationships
When it comes to our customers,
we’re focused on understanding
what they need to be successful
– and this is making a difference.
Our Australian Anchor Food
Professionals team was voted by
foodservice customers – including
Countrywide, NAFDA and PFD –
as the number one supplier for the
second year in a row in the annual
Advantage Survey. Here at home,
our consumer business, Fonterra
Brands New Zealand (FBNZ),
also maintained its number one
supplier position with supermarket
customers for the second time in
the 2021 New Zealand Advantage
Survey, coming first equal with
Dominion Breweries.
New Zealand nutrition
story helping
differentiate our
customers’ brands
Nutifood launched its first 100%
grass-fed milk into Vietnam, using
our sustainability credentials, while
Cheerston launched the first NZMP
grass-fed claimed cheese product
into the Chinese market. Our
‘Cared for Cows’ and ‘Grass Fed’
are certified by AsureQuality and
offered to our customers as part
of our suite of dairy claims. These
provide assurance that our cows are
pasture-based, experience a natural
way of life and are free to roam
outdoors with a high level of animal
wellbeing.
Chef preparing desserts
Isabella, Methven
Mozzarella dumplings
Chef preparing desserts
0809
FONTERRA INTERIM REPORT 2022OUR PROGRESS

Sustainability Innovation Award for NZMP
Organic Butter – carbonzero™ certified
Our Ingredients business, NZMP, has won two Sustainability
Innovation Awards for its Organic Butter – carbonzero™ certified,
which was launched last year to help our customers achieve their
own sustainability goals. The awards recognise organisations that
have measurable supply chain strategies, focused on environmental,
economic or socially sustainable practices.
On farm
Kowbucha™ methane reduction trial moves
to next stage

Finding a solution to the challenge of on-farm emissions will be a game-
changer. The next phase of our Kowbucha™ trial, a probiotic which could
switch off the bugs that create methane in cows, continues to look promising.
We have completed on-farm trials with calves fed milk with Kowbucha™ and
while it’s still early days, the results have indicated a reduction in methane
of up to 20%. These calves are now grazing on grass and we’re monitoring
whether they are still benefiting from Kowbucha
TM
. At the same time, we’re
trialling Kowbucha™ with mature animals. In particular, sheep. The reason for
this is we can complete the trials faster and with larger numbers than with
cows. If the results continue to show promise, we will move into trials with
cows.
More Farm Environment Plans
Increasingly, consumers are looking for products which are made in a
sustainable way. The Co-operative Difference is our way of connecting
Fonterra farmers with customers to ensure our milk is backed by the
sustainability credentials consumers want. Farm Environment Plans (FEP)
are a key component in The Co-operative Difference, helping Fonterra
farmers to assess how their farm is performing relative to good practice
and provide practical actions to improve their environmental performance
and reduce risks. 61% of the Co-op’s supplying farms in New Zealand now
have one, up from 53% at the start of the financial year and well on our way
towards our target of 100% of supplying farms by 2025.
First Farm Insight Reports delivered
We also introduced individualised Farm Insights Reports, which give Fonterra
farmers information on milk quality, environmental performance and animal
health. The reports also include information on the farm’s performance under
The Co-operative Difference Programme, a Greenhouse Gas report and a
Nitrogen Risk Scorecard. The reports highlight opportunities for improvement
and our field teams are able to use the data, and work alongside Fonterra
farmers, to suggest changes to help improve performance, reduce risks and
potentially save time and costs.
Off farm
Making progress towards Net Zero
Our Te Awamutu boiler coal to wood pellet conversion project has delivered
a reliable performance, and carbon reduction benefits as expected in the
business case. We have also gained valuable experience for construction
and operation of future conversion and new boiler projects. Good progress
has been made with site works at Stirling for a new biomass boiler. Whilst
the majority of the boiler components are either at site or on the water, the
expected commissioning date is likely to be delayed as the long-standing
Austrian boiler manufacturer undergoes a debt restructuring. Once complete,
Stirling will be our first site to run on 100% renewable thermal energy. We’re
also progressing plans to move out of coal at the remaining eight (out of 48)
sites by 2037, with the majority of the changes within the next eight years.
Be a leader in dairy
innovation and science
Unlocking the power of our probiotics
Through a transformative dairy science collaboration with VitaKey, we are
exploring how we can further unlock the benefits of our probiotic strains.
VitaKey specialises in precision delivery of nutrition – an emerging area
of research that seeks to deliver the right nutrients, in the right amount,
to the right part of the body at the right time. Our goal is to design dairy
products that incorporate targeted and time-controlled release of specific
dairy nutrients in a way that locks in the freshness for longer and allows the
nutrients to be more beneficial in our bodies. This is one way we are tapping
into the health and wellness trend as people look to nutrition solutions to
help them live healthier and longer lives.

VitaKey specialises in the precision delivery of nutrition.
Its customised platform technology stabilizes and delivers
nutrients, vitamins, probiotics, antioxidants, proteins and
flavours to ensure increased bioavailability with targeted and
controlled release within the digestive tract. The technology
can be customised across the entire food supply chain from
agriculture to animal feed, pet food, infant formula to senior
nutrition, and food and beverages.
Dr. Robert Langer, the co-founder of VitaKey, is a founding father
of drug delivery and controlled-release technology, and Institute
Professor at Massachusetts Institute of Technology. Dr. Langer
has over 45 years of expertise in drug delivery, materials science,
and polymer chemistry. He is the most cited engineer in history
with over 1,500 publications and 1,400 issued and pending
patents worldwide. Dr. Langer has received more than 220
major science awards, including The Queen Elizabeth Prize for
Engineering, a global prize for engineering and innovation. More
than 40 biotech companies are a result of his research, with a
combined market capitalisation over $250 billion.”
Be a leader
in sustainability
Dr. Robert Langer
Theepan & Chujun, Palmerston North (FRDC)
Dave & Gareth, Taranaki
1011
FONTERRA INTERIM REPORT 2022OUR PROGRESS

Doing Good Together
Our farmer owners and employees have continued to look out for one
another and their local communities, while proactively managing risks
and adapting quickly in response to COVID-19 and other challenges.
It’s thanks to their hard work and commitment that we continue to get
our product to customers and for this we thank them.
Supporting our local communities
To support the Government’s COVID-19 testing efforts, our Fonterra
Brands Indonesia team donated 4,000 swab antigen tests kits for use
in local communities
Te Pou Mātāpuna
– Our Fonterra Story
Te Mātāpuna tells
the same story as
our name, Fonterra
meaning to “spring
from the earth”
The Rural Support Trust received over $100,000 following the Fonterra versus Parliament
charity rugby match to support flood-affected South Island farmers
Bringing our farmers and employees
closer together
To help our farmers and teams in South East Asia better
understand the work each of them do, we launched ‘Adopt
A Farm’. Through this initiative our employees adopt and follow
a farm through the seasons so they can learn about the effort
that goes in to making our nutritious milk more sustainable.
As a result, they are better equipped to speak to customers
about our unique New Zealand farming system. And our
farmer owners gain a better understanding of customers and
consumers’ needs.
When you work in a brands business, it’s often easy to
lose sight of where it all begins. It’s been an absolute privilege
hearing about their story, from the farm to their family and
the lengths they go to deliver the dairy goodness that our
customers and consumers love.”
– Willy Low, Director, Chilled Foods SEA.
Scan the QR code
to find out more
about Te Pou.
As COVID-19 rates increased, hard working nurses in French
Polynesia received Anchor milk and cookie packages from our
local team as a way to say thank you and boost morale
Giggles Childcare centre in Northland is one of a number of schools
we kitted out with high-viz vests, because Doing Good Together
means keeping our littlest people safe too
PHOTO CREDIT: KEVIN CLARKE, CMG SPORT
Tane Lagah, carver in Katz’s Team
Our people
We are a Co-op who connects
people from all over the world, so
it’s important that we’re confident in
who we are, what we stand for and
our cultural identity. Māori culture,
people and perspectives play a
significant role in shaping who we
are and our identity here in Aotearoa
New Zealand and around the world.
We are starting to integrate
te ao Māori culture within our Co-op
and as part of this we’ve created a
pou, a Māori wood carving, to help
us tell our story.
It’s a physical representation of our
Co-op and everyone in it, telling
the story of our past, our present
and our future ambitions, a tangible
reminder that our strength and
success come from working
together and from our connection
to Aotearoa New Zealand out into
the world.
He aha te mea nui o te ao?
He tāngata, he tāngata, he tāngata.
What is the most important thing in the world?
It is people, it is people, it is people.
Approximately
367,000 meal
equivalents of Fonterra
dairy products
have been donated
to families in need
across Aotearoa this
year, through our
partnership with
the New Zealand
Food Network.
Geoff Spark, Canterbury
Farmer and Master Carver
Arekatera Maihi (Katz)
Our Canpac team from Hamilton
Representatives of Ngāti Whātua Ōrākei
and Fonterra at wood blessing
More than 350 kids in the Waikato woke up in new pyjamas thanks to
the efforts of our London Street team together with local organisation
‘Christmas PJs for kids’
12
FONTERRA INTERIM REPORT 2022OUR PROGRESS
13

Business Performance
Dashboard
Interim
Dividend
Earnings
per share
$
10.8b
5
c
22
c
To t a l
Group
revenue
31 May
11
9
7
30 Nov31 May
Monthly Milk Prices for 2020/2021
Season Farmgate Milk Price of
$7.54 per kgMS
Indicative Monthly Milk Prices for
2021/2022 Season Farmgate Milk
Price forecast of $9.60 per kgMS
Asia Pacific
28
Page
30
Page
18
Page
17
Page
Greater China
36
Page
$
144m
Ingredients
normalised EBIT
up $53m
$
89m
Foodservice
normalised EBIT
down $105m
AMENA
32
Page
$
184m
Ingredients
normalised EBIT
up $44m
$
66m
Consumer
normalised EBIT
up $14m
Foodservice
normalised EBIT
down $169m
Consumer
normalised EBIT
down $34m
$
413m
$
146m
$
85m
Reported
profit
after tax
Ingredients
normalised EBIT
up $20m
Consumer
normalised EBIT
down $42m
$
364m
down $27m
for the first six
months of FY22
$
85m
$
77m
MONTHLY MILK PRICES
$
2 kgMS
per
relative to the
comparative period
Our cost of milk has been
significantly higher
per share
Ingredients
normalised EBIT
up $117m
up $882m
New Zealand
season to date milk
collections of 1,033m
kgMS, down 3.6%
Discontinued
operations
We are progressing
with the sale process
of DPA Brazil and
Hangu China farm
26
Page
38
Page
Group
Operations’
attribution
reduced
Latin America
normalised EBIT
up $21m driven
by our Consumer
business in Chile
Kylie, Manawatū-Whanganui
Page
16
on average by
$
76m
down $13m
1415
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Total Group
Performance
Our profit after tax for the first six months of the 2022 Financial
Year is $364 million, and we have confirmed an interim dividend
of 5cents per share.
Our performance for the six months reflects consistent and
strong demand across multiple markets and products at a time of
constrained milk supply and a significantly higher cost of milk for our
businesses. We achieved an improved performance in our Ingredients
channel and our businesses in Chile and Australia, but this was offset
by tighter margins in our Foodservice and Consumer channels.
Our lower interest expense more than offset an increase in the
tax expense and our reported profit after tax of $364 million
is $27 million lower than last year. With no normalisations for the first
six months of the 2022 Financial Year, our normalised profit after tax
is down $54 million.
This is a good result in the context of the significant increase in the
cost of milk we have experienced during this period.
The GDT Index is at its highest level since 2013. Several products within
the index flow directly into our Farmgate Milk Price, which currently has a
forecast midpoint of $9.60 per kgMS for this season.
As illustrated in the Monthly Milk Prices graph, our monthly cost of milk
has been on average around $2 per kgMS higher than the comparable
period, and has placed significant pressure on margins in our Foodservice
and Consumer channels.
31 May
11
9
7
30 Nov31 May
Monthly Milk Prices for 2020/2021
Season Farmgate Milk Price of
$7.54 per kgMS
Indicative Monthly Milk Prices for
2021/2022 Season Farmgate Milk
Price forecast of $9.60 per kgMS
COVID-19 continues to impact our people all around the world, global
markets and the supply chain. Despite these challenges our people continue
to show agility and resilience. We leverage the strength of our supply chain
partnerships, such as Kotahi and Coda, to deliver for our customers, and
focus on allocating milk to the products that generate the best overall
returns to Fonterra, our farmer owners and unit holders.
The higher cost of milk this financial year reflects a price response to
ongoing strong global demand combined with the tight supply we have
experienced in New Zealand from a drier summer, plus lower milk growth
from other key dairy producing countries. Both US and EU milk production
figures show a significant slowdown relative to the comparative period.
Fonterra’s milk collections are dominated by our New Zealand sourced milk,
complemented by milk sources in both Australia and Chile. Our collections
in New Zealand are down 4% compared to the previous season mainly due
to the drier summer.
Our Australian milk collections are down primarily due to seasonal weather
impacting on farm conditions and a broader rationalising of herd sizes
supported by strong beef prices. Our Chile milk collections are up as we
continued to focus on farmer engagement and a competitive and consistent
milk price policy.
MILK COLLECTIONS FROM MAIN REGIONS
(LITRES, MILLION)20212022CHANGE
Fonterra New Zealand
1
12,37911,918(4)%
Fonterra Australia
2
909899(1)%
Fonterra Chile
3
2922941%
Total13,58013,111(3)%
1. Fonterra New Zealand milk collections are for the period 1 June – 31 January.
2. Fonterra Australia milk collections are for the period 1 July – 31 January.
3. Fonterra Chile milk collections are for the period 1 August – 31 January.
Interim dividend
5
c

per share
Reported profit
after tax
$364m
down $27m
GDT PRICE INDEX (2012-2022)
MONTHLY MILK PRICES (NZ$/KGMS)
20122013201420152016201720182019202020212022
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
3,600
Our market share of
milk collections has
increased slightly in Chile,
and our market share in
both New Zealand and
Australia remain stable.
1617
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

BREAKDOWN OF TOTAL GROUP PERFORMANCE
FOR THE SIX MONTHS ENDED 31 JANUARY 202131 JANUARY 2022
NORMALISED BASIS
NZD MILLION
CONTINUING
OPERATIONS
1
DISCONTINUED
OPERATIONS
1
TOTAL GROUP
CONTINUING
OPERATIONS
1
DISCONTINUED
OPERATIONS
1
TOTAL GROUP
Sales volume (‘000 MT) 1,875 121 1,996 1,8161051,921
Revenue9,597 318 9,915 10,58820910,797
Cost of goods sold( 7, 9 4 6 )(247)(8,193)(9,039)(151)(9,190)
Gross profit1,651 71 1,722 1,549581,607
Gross margin (%)17. 2 %22.3%17. 4%14.6%27. 8 %14.9%
Operating expenses(1,013)(42)(1,055)(1,011)(51)(1,062)
Other
2
14 3 17 63(1)62
Normalised EBIT652 32 684 6016607
Normalisations
3
(50)23 (27)–––
EBIT602 55 657 6016607
1. Refer to Note 1a and 2b of the FY22 Interim Financial Statements.
2. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees.
3. Refer to the Non-GAAP Measures section of the report.
We continue to be a reliable source of dairy to the global market as we
leverage the strengths of our supply chain partnerships, including Kotahi and
Coda, to manage the ongoing shipment challenges created by global supply
chain disruption. However, our sales volumes are down 75,000 MT, or 4%,
relative to the comparative period mainly due to our lower milk collections in
New Zealand and Australia.
Our Total Group revenue is up $882 million, or 9%, despite the lower sales
volume, due to improved sales prices. Product prices on the global market
are being impacted by ongoing supply constraints and continued strong
demand. Our reference product revenue, which informs the price we pay for
our New Zealand farmers’ milk, increased 24% relative to the comparative
period and has made the cost of milk significantly higher for our businesses.
This was the main driver for our cost of goods sold increasing 12%, up
$997 million. Inflationary pressures impacting our cost of goods sold have
been partially offset by efficiency gains, particularly in our New Zealand
manufacturing operations.
Our sales regions’ Ingredients channels all had improved gross margins
predominantly due to favourable margins in our protein portfolio, with
increased demand for our caseinate and whey protein concentrate (WPC)
products. However, our Total Group gross margin has reduced, from 17.4%
to 14.9%, as we were not able to fully recover the significant increase in the
cost of milk through our Foodservice and Consumer channels – with all three
sales regions achieving lower gross margins in these channels relative to the
comparative period.
As a result of the lower gross margins and sales volumes, our Total Group
gross profit reduced $115 million, or 7% to $1,607 million.
Our Total Group operating expenses are $7 million higher than the
comparative period, due to an increase in administration, storage and
distribution costs mainly related to COVID-19 supply chain disruption.
In addition, we also incurred costs associated with discontinuing some
products that are not aligned with our long-term strategy. The impact
of the increased costs were partially offset by the release of a $44 million
provision held at Group following a final judicial interpretation on
the application of the Holidays Act 2003 in New Zealand to certain
discretionary incentive payments.
The $45 million improvement in ‘Other’ relative to last year, was largely due
to higher other operating income and the non-recurrence of adverse items in
the previous period.
Our Total Group normalised EBIT is down 11% to $607 million
predominately due to tighter gross margins from the higher cost of milk,
particularly in our Foodservice channel.
Our Total Group result includes discontinued operations that we expect to
sell within a year of the reporting date.
For the first six months of the 2022 Financial Year, discontinued operations
included DPA Brazil and our Hangu China farm. The comparative period
performance also includes Ying and Yutian China Farming hubs, in addition
to DPA Brazil and our Hangu China farm.
Our discontinued operations’ gross margin improved from 22.3% to 27.8%,
reflecting the removal of the lower margin from the Ying and Yutian China
Farming hubs as well as improved pricing in DPA Brazil. Normalised EBIT is
down 81% to $6 million, due to the comparative period including the Ying and
Yutian China Farming hubs.
20222021202020192018
458
312
584
684
607

TOTAL GROUP NORMALISED EBIT ($ MILLION)
Our normalised profit after tax of $364m is down $54 million, with our lower
EBIT being partially offset by a lower interest expense due to our reduced
debt levels and the benefit from fixed interest rate hedges as interest rates
have risen.
20222021202020192018
248
72
293
418
364

NORMALISED PROFIT AFTER TAX
1
($ MILLION)
1. Includes amounts attributable to non-controlling interests.
Our Total Group revenue is up
$882 million, or 9%, despite
the lower sales volume, due to
improved sales prices.
Daniel & Denise, Darfield
1819
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Working capital days have increased by five days compared to the same
period last year.
The key drivers were:
–the increase in average inventory days as a result of the higher cost of milk
and lower payable days; partially offset by
–favourable receivable days due to improved customer collection
management.
Our total capital invested in the first six months of the 2022 Financial Year
was in line with our expectations.
The majority of our capital expenditure is weighted to the second half of
the year. This is due to the shape of the New Zealand milk supply curve and
allows the bulk of the work on the manufacturing plants to be undertaken
during the off-peak period.
Our capital expenditure is focused on maintaining integrity and reliability
across the processing assets, improving wastewater treatment and reducing
emissions from thermal fuel sources. Key projects year-to-date are largely
the continuation of last year’s projects, such as, wastewater upgrades at
the Whareroa and Te Awamutu sites, installation of a biomass boiler at the
Stirling site, and optimising our lactose assets and improving site safety with
the removal of our ethanol plant at Tirau and Edgecumbe.
Our net debt levels have continued to decrease year-on-year, down
$501 million, from 31 January 2021.
This reflects continued strong earnings and proceeds from divestments of
$646 million, which occurred in the second half of the last financial year and
included the sale of the two wholly-owned China farming hubs, the China
Farm joint venture and the remaining Beingmate shares.
From a cash flow perspective, our earnings have largely absorbed an increase
in seasonal net working capital funding due to the higher cost of milk, along
with an increase in dividends paid over the past 12 months relative to the
comparative period. This has allowed cash proceeds from divestments to be
largely used to reduce debt.

Our free cash flow for the first six months is typically an outflow reflecting
the seasonal nature of the business.
It was a $(849) million outflow, which is $217 million more than last year and
reflects:
–an increase in seasonal net working capital funding due to the higher cost
of milk; and
–divestments of $103 million that occurred in the first six months of the
2021 Financial Year, that did not recur in the first six months of the 2022
Financial Year; partially offset by
–increased cash earnings.
20222021202020192018
346
108
454
316
122
438
112
63
175
147
37
184
180
15
195

180
Capital expenditureOther capital invested
CAPITAL INVESTED
1
($ MILLION)
1. Refer to Glossary for definition.
20222021202020192018
80
81
82
90
95

WORKING CAPITAL DAYS
1
1. Refer to Glossary for definition.
A focus on financial discipline
202220212020
6.4
5.2
6.1
4.3
5.6
Half yearFull year
NET DEBT
1
($ BILLION)
20222021202020192018
(690)
(782)
369
(632)
(849)

FREE CASH FLOW
1
($ MILLION)
1. Refer to Glossary for definition.
1. Refer to Glossary for definition.
2021
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Group Operations
Group Operations is comprised of the functions that the Chief Operating
Officer (COO) has responsibility for (including New Zealand milk collection
and processing operations and assets, global supply chain, digital and
information technology, sustainability and innovation); Fonterra Farm
Source™ retail stores; and the Central Portfolio Management (CPM)
function. CPM’s goal is to optimise our business by connecting customers
with our assets, farmers and markets to allocate our milk to the most
valuable products. It includes optimising the New Zealand milk pool,
in-market product pricing support for the regions, managing Fonterra’s
dairy and non-dairy product price risk, as well as providing customer and
farmer price risk management tools.
Our New Zealand milk collections from 1 June 2021 to 31 January 2022
were 1,033 million kgMS, down 3.6% or 38 million kgMS on last season.
Varied weather and challenging growing conditions across many parts
of New Zealand affected pasture growth and collections early in the
season. Despite good moisture levels in December, the very dry and warm
conditions in January have led to declining soil moisture and reduced feed in
the North Island. The full season forecast collections have been revised to
1,480 million kgMS, down from the opening forecast of 1,525 million kgMS.
Our key milk collection transport metrics of cost (cents per litre), timeliness
and fuel efficiency have benefited from the roll out of the on-farm milk vat
monitoring technology during the prior year. It has enabled efficiencies in
milk collection scheduling through visibility of on-farm milk conditions and
volumes. Both our timeliness of milk collections and fuel efficiency have
improved. In addition, we significantly reduced the use of contractors, which
incur higher costs than our internal fleet, during the peak collection period
due to both lower collection volumes and optimisation.
The efficiency improvements from the on-farm milk vat monitoring
technology have helped offset the significant increase in costs, such as
diesel. However, the lower milk volumes collected as a result of the drier
weather conditions, coupled with overall cost increases, has meant our milk
collection cost per litre is higher than the comparative period.
Within our New Zealand manufacturing operations, we are continuing
to realise cost efficiencies through the value chain, driven by continuous
improvement in milk utilisation, plant uptime and an uplift in productivity.
We’ve also seen the benefit of improved systems and processes on plant
reliability. One example is our Asset Care Programme, which manages
asset condition, prioritises maintenance and improves capital project
delivery. We continue to focus on the rate of product made ‘right first
time’, a measure which tracks the product that passes grading tests
once manufactured. It is tracking favourably relative to the comparative
period. Our focus is to manage risks within our control to ensure that we
can maximise the value of each kilogram of milk solids.
COVID-19 continues to test global supply chains. Despite these challenges,
we are delivering for our customers. We continue to leverage the strength
of our partnerships, including Kotahi (the ocean freight partnership we have
with Silver Fern Farms working alongside our ocean freight supplier Maersk)
and Coda (our New Zealand domestic land freight partnership with Port of
Tauranga), while the agility of our people to rework schedules has allowed
us to secure additional shipping capacity. We expect these challenging
conditions to continue into the second half of the financial year.
0
JunJulAugSepOctNovDecJanFebMarAprMay
1
4
5
6
7
8
2
3
FONTERRA’S NEW ZEALAND MILK PRODUCTION (KGMS MILLIONS)
Our New Zealand milk collections
1,033m kgMS
down 3.6%
SeasonMilk Solids Produced (full season)
2019/201,517m kgMS
2020/211,539m kgMS
2021/221,480m kgMS
1
1. Current full season forecast
2223
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

We continue to focus on allocating milk into the products that generate
the best overall returns for Fonterra, our farmer owners and unit holders.
The global dairy market for the first half of the 2022 Financial Year has been
very different from the same period last year and is shaping up to be a very
successful season, but not without its challenges. The GDT Index is at its
highest level since 2013, and several of the products within the index flow
directly into our Farmgate Milk Price, which currently has a forecast midpoint
of $9.60 – an all-time high. It is $2.40 per kgMS higher than at the same time
last year. The higher cost of milk this year in part reflects a price response
to the lower milk supply we have experienced in New Zealand, with a drier
summer resulting in our New Zealand collections forecast to be down 3.8%
on last year. In addition, there is lower milk growth from other key dairy
producing countries, with both US and EU milk production figures showing
a significant slowdown in comparison to the same time last year. On the
demand side, we have seen continuing strong demand for our ingredients
across all markets with the key reference products achieving, or near to, the
highest prices over the past five years – including butter at its highest price
ever. As the dry summer started to impact New Zealand collections, we
have carefully managed our contract book and sales programme to meet our
commitments to our customers through this season and into the start of the
next season.
Strong global demand has meant non-reference products, such as casein and
whey protein concentrate (WPC), have achieved significantly higher prices
than last year. However, the overall margin of our non-reference portfolio
has reduced, which is not uncommon during periods of higher milk prices.
The increased prices and margins for caseins and WPCs, combined with our
commodity hedging programme, have enabled us to stabilise non-reference
product margins and thereby reduce possible margin loss in the Ingredients
channel through this higher milk price cycle. We note, however, as the higher
input cost flows through our Consumer and Foodservice channels, margins
in those channels are expected to be under further pressure.
The average reference and non-reference product sale prices per metric tonne
have increased 24% and 16%, respectively, relative to the comparative period.
Whole milk powder (WMP) has been the significant contributor to the
increase in the weighted average reference product price, with GDT contract
prices around USD 3,000 per metric tonne at the start of August 2020 and
finishing around USD 4,100 per metric tonne in January 2022. However,
butter and anhydrous milk fat (AMF) increased the most, with both rising
over USD 2,500 per metric tonne for the same period in response to
tightening global supply and strong demand.
The non-reference portfolio also benefited from the strong global market
with prices increasing significantly but at a slower rate than the reference
portfolio. Within the non-reference portfolio, casein and whey products
have increased significantly while other products, such as cheese, which
typically have more stable pricing or have a greater weighting of non-spot
pricing arrangements, have increased at a slower rate.
NEW ZEALAND SOURCED INGREDIENTS’ PRODUCT MIX
1
FOR THE SIX MONTHS
ENDED 31 JANUARY20212022
Sales Volume (‘000 MT)
Reference products870793
Non-reference products419415
(NZD)$ BILLION$ PER MT$ BILLION$ PER MT
Revenue
Reference products4.24,7844.75,916
Non-reference products2.35,3722.66,221
Cost of Milk
Reference products3.23,6763.74,702
Non-reference products1.43,2941.74,144
1. Table excludes bulk liquid milk. Bulk liquids for the six months ended 31 January 2022 was
34,000 MT of kgMS equivalent (the six months ended 31 January 2021 was 36,000 MT of kgMS
equivalent).
Note: Figures represent Fonterra-sourced New Zealand milk only. Reference products are
products used in the calculation of the Farmgate Milk Price – WMP, SMP, BMP, Butter and AMF.
Milk solids used in the products sold were 441 million kgMS in reference products and 207 million
kgMS non-reference products (previous comparative period 488 million kgMS reference products
and 205 million non-reference products).
Price relativities between reference and non-reference products have improved
during the second quarter relative to the first quarter of the 2022 Financial
Year. However, they were less favourable than the prior year comparative.
REFERENCE AND NON-REFERENCE PRICE RELATIVITIES
31 Jul 2031 Jan 2131 Jul 2131 Jan 22
(US$/MT)
FY21 H2FY21 H1FY22 H1
Non-reference product shipment price
1,3
Reference product shipment price
1,2
2,000
3,000
4,000
5,000
Source: GlobalDairyTrade
1. The shipment price is a weighted average price of GDT contracts struck one to five months prior
to the agreed shipment month. Shipment month is the month in which the sale would be deemed
for financial reporting purposes to have been completed, and will normally be the month in which
the sale is invoiced and the product is shipped.
2. Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF
and Butter prices achieved on GDT.
3. Non-reference product shipment price is represented by the cheddar prices achieved on GDT.
Sherri & Kerey, Darfield
2425
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Group Operations’ Attribution to Regional Segments
In broad terms, Group Operations collects and processes New Zealand
milk into the most valuable products that are then sold to our customers
by the regional business units. The segment reporting within the
Financial Statements is prepared based on the regional business units,
with the income statement of Group Operations attributed between
the three regional business units. This attribution enables the results of
both the regional business and product channels to be presented on an
end-to-end basis.
When products are transferred between Group Operations and the regions,
the internal prices are determined by market-based commodity reference
prices (e.g., GDT and other external benchmarks) and include charges, where
appropriate, to reflect the additional costs of producing non-commoditised
products. The internal pricing is reviewed weekly for Ingredients products
and either monthly or quarterly for Consumer and Foodservice products.
The Group Operations performance (that is attributed to the three regions)
includes movements in the capital charge on the notional Milk Price asset
base pursuant to the Milk Price Manual, the impact of longer-term pricing
commitments, product mix and price relativities between reference and non-
reference ingredient products.
When attributing the results of Group Operations to the regions, the
principle is for the end-to-end margin to reflect the underlying transaction
between Fonterra and the customer, where possible. If costs are not
directly linked to transactions, such as overheads, attributions are activity
based where appropriate e.g. Information Technology and Research and
Development. If none of these principles applies, the attribution uses the
share of product sold/manufactured in the region as the base of allocation.
Overall, the Group Operations’ EBIT has reduced $13 million relative to the
comparative period.
Key drivers of the reduction in our Group Operations’ EBIT are the adverse
movement on the gross margins of our product portfolio, particularly non-
reference products, due to the higher cost of milk. In addition, there was an
increase in supply chain costs and manufacturing costs due to COVID-19
related challenges and inflationary pressures. We have been able to partially
offset the adverse impact of pricing relativities between reference and non-
reference products with our commodity hedging programme and partially
offset rising costs through efficiency gains at our manufacturing sites and in
our wider supply chain.
GROUP OPERATIONS’ ATTRIBUTION
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
(NZD MILLIONS)TOTALASIA PACIFICAMENAGREATER CHINA
20212022CHANGE
1
20212022CHANGE
1
20212022CHANGE
1
20212022CHANGE
1
Group Operations’
attribution to regional
segments
89 76 (15)% 47 24(49)%17 40 135%25 12 (52)%
1. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures. Comparative information includes re-presentations for consistency with
the current period.
Overall, the Group Operations’
attribution has reduced $13 million
relative to the prior period, from
$89 million to $76 million.
Nesta, Manawatū-Whanganui
2627
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

AMENATotals
EBIT
contribution
1,2
Ingredients
Foodservice
Consumer
Total
1,834
3%
635
6%
631
1%
568
4%
$
413m
$117m
$
85m
$20m
$
184m
$44m
$
144m
$53m
$
85m
$169m
$
(4)m
$56m
$
0m
$8m
$
89m
$105m
$
146m
$34m
$
77m
$42m
$
66m
$14m
$
3m
$6
$
158m
$78m
$
250m
$50m
$
236m
$58m
Volume
(’000 MT)
Asia PacificGreater China
Summary
of Regions
Our regional performance and commentary in this section and the
subsequent sections on individual regions, are prepared on a normalised
continuing operations basis, unless stated otherwise.
1. Normalised EBIT contribution includes Group Operation EBIT attribution and sums to
$644 million. It does not align to reported continuing operations due to excluding unallocated
costs and eliminations.
2. Comparative information includes re-presentations for consistency with the current period.
Looking at our continuing operations by region:
Asia Pacific normalised EBIT decreased 33% to $158 million.
We had improved gross margins in our Australia business. However,
this was more than offset by lower gross margins in the Foodservice
and Consumer channels across the Asia Pacific region, which was most
notable in our South East Asia and New Zealand businesses.
AMENA normalised EBIT was up 25% to $250 million. We achieved
improved pricing and product mix in our Ingredients channel and continued
volume and gross margin growth in our consumer business in Chile.
Greater China normalised EBIT decreased 20% to $236 million. We had
improved gross margins in our Ingredients channel, driven by our protein
portfolio. However, this was more than offset by the lower gross margins
achieved in the Foodservice channel.
Looking at our continuing operations by product
channel:
Ingredients’ normalised EBIT increased 40% to $413 million, due to
improved gross margins – in part reflecting increased demand in our protein
portfolio for our caseinate and WPC products.
–Caseinate demand has been driven by the increased use of this ingredient
as an emulsifier in non-dairy creamers (i.e., substitutes for milk or cream)
as an additive for beverages such as coffee, tea, and hot chocolate
–WPC demand has been driven by increased use of our specialty ingredient
whey products in hospitals and more broadly as consumers interest in
their health increases
Foodservice normalised EBIT decreased 67% to $85 million. Our in-
market sales pricing was unable to increase at the same rate as rising dairy
prices, reducing margins in this channel across all regions, but particularly in
Greater China and South East Asia.
Consumer normalised EBIT decreased 19% to $146 million, where we had
strong performances in our Chile and Australia consumer businesses, but
this was more than offset by the same margin challenges in the Foodservice
channel mentioned above.
2829
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Asia Pacific
Our Asia Pacific business covers New Zealand, Australia, Pacific Islands,
South East Asia, and South Asia.
Asia Pacific’s EBIT was $158 million, a decrease of $78 million, or 33%.
Our Ingredients channel EBIT in Asia Pacific increased due to higher gross
margins in our Australian business. However, this was more than offset by
the lower gross margins in the Foodservice and Consumer channels, which
was most notable in our South East Asia and New Zealand businesses.
ASIA PACIFIC PERFORMANCE
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALINGREDIENTSFOODSERVICECONSUMER
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
Sales volume
(‘000 MT)
3
672635(6)%280251(10)%82842%310300(3)%
Revenue3,3993,4873%1,6361,7648%4694823%1,2941,241(4)%
Cost of goods sold(2,742)(2,919)(6)%(1,461)(1,568)(7)%(351)(417)(19)%(930)(934)(0)%
Gross profit 657568(14)%17519612%11865(45)%364307(16)%
Operating expenses(423)(423)0%(112)(122)(9)%(67)(70)(4)%(244)(231)5%
Other
4
213550%211450%110%(1)1–
EBIT
5
236158(33)%658531%52(4)–11977(35)%
Includes EBIT
attribution from
Group Operations
4724(49)%
Gross margin19.3%16.3%10.7%11.1%25.2%13.5%28.1%24.7%
1. Asia Pacific performance is prepared on a continuing operations basis. Comparative information includes re-presentations for consistency with the current period.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures.
3. Includes sales to other segments.
4. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees.
5. This includes EBIT attribution from Group Operations.
ASIA PACIFIC EBIT: KEY PERFORMANCE DRIVERS
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALINGREDIENTSFOODSERVICECONSUMER
EBIT 20212366552119
Volume(15)(6)2(11)
Margin (price, cost
and product mix)
(34)39(38)(35)
Operating expenses
and other
2
(6)6(9)(3)
Group Operations
attribution
(23)(19)(11)7
EBIT 202215885(4)77
1. Asia Pacific performance is prepared on a continuing operations basis. Comparative information
includes re-presentations for consistency with the current period.
2. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss
on equity accounted investees.
FY22 H1
EBIT
Group
Operations
attribution
Operating
expenses
and other
MarginVolumeFY21 H1
EBIT
236
(15)
(34)
(6)
(23)
158


Within the region
ASIA PACIFIC KEY EBIT PERFORMANCE DRIVERS
1
Normalised EBIT ($ million)
1. Asia Pacific performance is prepared on a continuing operations basis.
Our Asia Pacific Ingredients’ EBIT increased $20 million due to the continued
improvement in our Australia business performance. Our Australian
Ingredients channel has leveraged the strong increase in product prices in
the global market and benefited from a weaker Australian dollar.
The Australian Ingredients channel has also benefited domestically from the
support of the robust Australian Foodservice and Consumer channels, which
have remained stable compared to the comparative period due to rising
input costs being reflected in our in-market sales prices.
Our South East Asia business was a significant contributor to the reduced
EBIT in the Asia Pacific Foodservice and Consumer channels. Where
appropriate, our sales teams adjusted in-market sales prices to reflect the
increasing milk input costs in both channels. However, input costs have
climbed at a significant rate and there are weaker market conditions for
customers due to COVID-19 restrictions, Typhoon Rai in the Philippines and
flooding in Malaysia has limited our ability to adjust in-market prices at the
same rate as costs have increased.
The weakening currencies in Sri Lanka and South East Asia have meant our
input costs in-market, purchased in USD, have increased further in local
currency terms.
We have been able to partially offset the impact of higher input costs and
disruption from COVID-19 restrictions through a continued focus on new
initiatives and product launches to grow our market presence. Across our
South East Asia markets we have successfully launched Anlene Gold 5X™,
which is clinically proven to provide five key mobility benefits, and this has
enabled further growth in the active living category.
Similarly to our South East Asia business, our New Zealand brands’ business
has not fully recovered the higher input costs through our in-market pricing.
The New Zealand dairy market is very competitive for products in the
consumer channel, particularly for butter and cheese. This, coupled with
the impact of COVID-19 restrictions, resulted in limited capacity to adjust
our in-market prices at the same rate as our input costs have increased.
AUSTRALIA PERFORMANCE
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS NZD MILLION 31 JAN 202131 JAN 2022CHANGE
2
Milk collections (million kgMS)6968(2)%
Sales volume ('000 MT)
3
174172(1)%
Revenue8999162%
Cost of goods sold(796)(779)2%
Gross profit 10313733%
Operating expenses(68)(79)(16)%
Other
4
(3)1–
EBIT 325984%
Gross margin11.5%15.0%
1. Australia’s performance is prepared on a continuing operations basis and is prior to Group
Operations attribution.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in
the table due to rounding of figures.
3. Includes sales to other segments.
4. Consists of other operating income and net foreign exchange gains/(losses).
3031
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

AMENA
Our AMENA business covers Africa, Middle East, Europe, North Asia
and the Americas.
AMENA’s EBIT increased $50 million, or 25%, to $250 million, mainly
due to improved pricing and product mix in our Ingredients channel
and continued volume and gross margin growth in our Consumer
business in Chile.
Our AMENA Ingredients channel margins improved, reflecting a broad
strengthening of product prices which have also been supported
by producers in the USA and Europe lifting their pricing to offset
increased costs.
AMENA PERFORMANCE
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALINGREDIENTSFOODSERVICECONSUMER
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
Sales volume
(‘000 MT)
3
6276311%417401(4)%303620%1801948%
Revenue3,1973,73317%2,4772,90017%16319721%55763614%
Cost of goods sold(2,727)(3,198)(17)%(2,184)(2,555)(17)%(141)(183)(30)%(402)(460)(14)%
Gross profit 47053514%29334518%2214(36)%15517614%
Operating expenses(279)(307)(10)%(162)(180)(11)%(14)(15)(7)%(103)(112)(9)%
Other
4
922144%919111%–1––2–
EBIT
5
20025025%14018431%8–(100)%526627%
Includes EBIT
attribution from
Group Operations
1740135%
Gross margin14.7%14.3%11.8%11.9%13.5%7. 1%27. 8 %27.7 %
1. AMENA performance is prepared on a continuing operations basis. Comparative information includes re-presentations for consistency with the current period.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures.
3. Includes sales to other segments.
4. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees.
5. This includes EBIT attribution from Group Operations.
AMENA EBIT: KEY PERFORMANCE DRIVERS
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALINGREDIENTSFOODSERVICECONSUMER
EBIT 2021200140852
Volume8(9)413
Margin (price, cost
and product mix)
2930(10)9
Operating expenses
and other
2
(10)(1)(1)(8)
Group Operations
attribution
2324(1)–
EBIT 2022250184–66
1. AMENA performance is prepared on a continuing operations basis. Comparative information
includes re-presentations for consistency with the current period.
2. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss
on equity accounted investees.
FY22 H1
EBIT
Group
Operations
attribution
Operating
expenses
and other
MarginVolumeFY21 H1
EBIT
200
8
23
250
29
(10)

Within the region
1. AMENA performance is prepared on a continuing operations basis.
AMENA KEY EBIT PERFORMANCE DRIVERS
1
Normalised EBIT ($ million)
GLOBAL SMP PRICES
Jul 20Jan 21Jul 21Jan 22
1,750
2,250
2,750
3,250
3,750
4,250
USAEuropeGDT SMP Fonterra
The skim milk powder (SMP) graph above illustrates the price for
New Zealand product and offshore product has been much closer to parity
for the first six months of this financial year compared to the prior year.
Last year we allocated more of our milk to Greater China and the Asia Pacific
sales regions, as the demand and pricing for New Zealand milk was strong
in these regions – while our AMENA business had to compete with USA and
European producers selling well below our comparable GlobalDairyTrade
(GDT) prices. For the first six months of this financial year, our allocation of
available milk to the AMENA Ingredients channel was more stable. However,
lower milk collections in New Zealand have meant our sales volumes are
down on the prior period.
In addition to the improved market fundamentals, our AMENA Ingredients
channel gross margin has benefitted from an improved product mix as we
continue to develop demand for our specialty protein portfolio. We continue
to focus our growth efforts on higher value ingredients, in particular our
functional proteins range, and solutions targeting the areas of physical,
patient, digestive and mental wellness plus immunity.
–In North Asia our in-market teams continue to grow our partnerships
with key medical nutrition customers, and this has resulted in increased
sales of higher value caseinate and WPC products for the first six
months of the financial year. An example of this is the increased sales
of our SureProtein™ WPC 550 which delivers a high whey protein, low
viscosity beverage in a compact, ready-to-drink (RTD) format without
compromising on taste and texture, giving the elderly and patients more
of what they need to meet their nutritional requirements.
–In Europe and the USA, the active living market for protein products has
strengthened considerably over the first six months of the financial year.
In part, this is driven by the increased demand for immunity and medical
nutrition, but it is also due to the recovery of the market supporting
active lifestyles. Consumers are heading back to the work office and the
gym as COVID-19 restrictions begin to ease and demand for our protein
products used in snack bars and high protein beverages are increasing,
such as our SureProtein™ Calcium Caseinate 380 which offers high
protein levels (>90%) and slow release of essential amino acids.
H1 FY21
(US$/MT)
H2 FY21H1 FY22
Sources: CME, Dutch Dairy Board Netherlands, GlobalDairyTrade
Note: Prices are at source and do not include additional costs such as freight
3233
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Latin America
Our Latin America business continues to perform strongly, with EBIT
increasing 51% to $62 million – it predominantly comprises our Consumer
business in Chile.
LATIN AMERICA
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLION 20212022CHANGE
2
Sales volume ('000 MT)
3
182 192 5%
Revenue489 538 10%
Cost of goods sold(351)(376)(7)%
Gross profit 138 162 17%
Operating expenses(97)(100)(3)%
Other
4
– – –
EBIT 41 62 51%
Gross margin28.2%30.1%
1. Latin America performance is prepared on a continuing operations basis and is prior to Group Operations attribution. Latin America includes Chile and Brazil but excludes DPA Brazil, which is classified as a
discontinued operations.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures.
3. Includes sales to other segments.
4. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees.
We continue to see the positive impact of the Chilean Government’s
programmes to support citizens and the economy through COVID-19,
including its Emergency Family Income payments and on several occasions,
it has allowed citizens to withdraw a portion of their private pension funds.
This contributed to increased demand for dairy products as consumers
spent more.
Our increased sales volumes have been supported by stronger milk
collections in Chile as we continue to see the benefits of our improved
engagement with our Chilean farmers.
The increase in gross profit has largely been driven by an improved product
mix in Chile, with a shift from lower margin categories, such as cheese,
to high margin categories, such as yoghurt and desserts. This has been
supported by greater sales of our new products launched last year, including
our 1+1 Single Yoghurt and dessert Manjarate 3D. Last year both of these
products won ‘Product of the Year’, as voted by Chilean consumers, in their
respective yoghurt and dessert categories.
Towards the end of last financial year, we also released another three new
products, and subsequently each has won Product of the Year awards in
their respective categories during the current financial year:
–Leche Cremosa, a creamy whole milk used in coffees and breakfast cereals
(liquid milk category);
–Queso Rodda, a rich and creamy matured gouda cheese (cheese
category); and
–Yoghurt Batido Tetra, a yoghurt smoothie in a tetra box (yoghurt category).
Our gross margin has also benefited from the ability to leverage our number
one market share position and lift in-market prices. In addition, our increased
sales volumes improved our economies of scale and reduced the fixed cost
per unit to offset the higher raw milk cost.
Three new products
Leche Cremosa, a
creamy whole milk
used in coffees and
breakfast cereals
(liquid milk category).
Queso Rodda,
a rich and
creamy matured
gouda cheese
(cheese category).
Yo g h u r t B a t i d o
Tetra, a yoghurt
smoothie in
a tetra box
(yoghurt category)
3435
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Greater China
Greater China’s EBIT was $236 million, a decrease of $58 million, or 20%.
Our Ingredients channel EBIT increased due to higher gross margins, driven
by our protein portfolio. However, this was more than offset by the lower
gross margins achieved in the Foodservice channel.
GREATER CHINA PERFORMANCE
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALINGREDIENTSFOODSERVICECONSUMER
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
Sales volume
(‘000 MT)
3
593568(4)%399378(5)%148146(1)%4644(4)%
Revenue3,0613,45213%1,9032,23417%9371,0067%221212(4)%
Cost of goods sold(2,565)(2,994)(17)%(1,731)(2,007)(16)%(682)(833)(22)%(152)(154)(1)%
Gross profit 496458(8)%17222732%255173(32)%6958(16)%
Operating expenses(200)(233)(17)%(73)(89)(22)%(64)(88)(38)%(63)(56)11%
Other
4
(2)11–(8)6–3433%31(67)%
EBIT
5
294236(20)%9114458%19489(54)%93(67)%
Includes EBIT
attribution from
Group Operations
2512(52)%
Gross margin16.2%13.3%9.0%10.2%27. 2 %17. 2 %31.2%27.4%
1. Greater China performance is prepared on a continuing operations basis. Comparative information includes re-presentations for consistency with the current period.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures.
3. Includes sales to other segments.
4. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees.
5. This includes EBIT attribution from Group Operations.
GREATER CHINA EBIT: KEY PERFORMANCE DRIVERS
1
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALINGREDIENTSFOODSERVICECONSUMER
EBIT 2021294911949
Volume(11)(5)(3)(3)
Margin (price, cost
and product mix)
(24)23(37)(10)
Operating expenses
and other
2
(10)4(15)1
Group Operations
attribution
(13)31(50)6
EBIT 2022236144893
1. Greater China performance is prepared on a continuing operations basis. Comparative information
includes re-presentations for consistency with the current period.
2. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss
on equity accounted investees.
FY22 H1
EBIT
Group
Operations
attribution
Operating
expenses
and other
MarginVolumeFY21 H1
EBIT
294
(11)
(13)
236
(24)
(10)

Within the region
GREATER CHINA KEY EBIT PERFORMANCE DRIVERS
1
Normalised EBIT ($ million)
1. Greater China performance is prepared on a continuing operations basis.
Our Greater China Ingredients’ EBIT increased $53 million, or 58%, to
$144 million, mainly due to improved performance in our caseinate products
within our specialty protein portfolio. Strong demand and increased sales
prices from our other regions, particularly AMENA, has tightened available
supply and lifted pricing of protein products in Greater China. This was
particularly evident in our sales of caseinates, which not only experienced
a strong increase in pricing, but also sales volumes due to its increasing
popularity as an emulsifier in non-dairy creamers (i.e. substitutes for milk
or cream), such as coconut milk tea.
The Foodservice channel is an important contributor to our Greater China
business and has significantly expanded over the past years. We now have
a presence in 403 cities throughout China, compared to 372 cities this time
last year. Our sales volumes have remained stable over the first six months
of the financial year, with ongoing demand for our Foodservice products.
We continue to focus on driving sales through our innovative products,
such as Anchor™ Cheese-Pro Cream, Easy Topping Cream and Anchor Chef
Cream, all launched last year. These products were developed with a strong
focus on customer preferences. For example, Anchor™ Cheese-Pro Cream
has been specially formulated with cheese, cream and milk all in one mixture
to reduce the number of steps required to make cheese toppings for tea,
which is a growing category in the Greater China market.
We have been successful in growing these markets and it has helped us shift
milk into higher margin products. However, our margins in our Foodservice
channel have reduced as input costs have climbed at a significant rate over
the past six months, and we have not been able to adjust our in-market sales
prices at the same rate. The $105 million decrease in our Greater China
Foodservice EBIT to $89 million was the largest contributor to the overall
decline in our Greater China EBIT.
COVID-19 related testing and requirements at ports in China have become
stricter due to the COVID-19 outbreak in late 2021. This has increased port
congestion and the costs at various stages of the supply chain. In response
to port congestion, our teams are focused on finding the most efficient route
to market to reduce the impact on lead times and costs. However, operating
expenditure has increased, mainly due to increased supply chain costs.
3637
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Discontinued
Operations
We have two discontinued operations that are progressing through
sales processes.
DISCONTINUED OPERATIONS PERFORMANCE
FOR THE SIX MONTHS ENDED 31 JANUARY
NORMALISED BASIS
NZD MILLIONTOTALCHINA FARMS
1
DPA BRAZIL
20212022CHANGE
2
20212022CHANGE
2
20212022CHANGE
2
Sales volume ('000 MT) 121105(13)%111(91)%110104(5)%
Revenue318209(34)%13513(90)%1831967%
Cost of goods sold(247)(151)39%(113)(15)87%(134)(136)(1)%
Gross profit 7158(18)%22(2)–496022%
Operating expenses(42)(51)(21)%(6)(6)0%(36)(45)(25)%
Other
3
3(1)–4––(1)(1)0%
EBIT
4
326(81)%20(8)–121417%
Gross margin22.3%27. 8 % 16.3%(15.4)% 26.8%30.6%
1. 2021 performance includes Ying and Yutian China Farming hubs, which were subsequently sold.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures.
3. Consists of other operating income and net foreign exchange gains/(losses).
4. Depreciation is not recognised in discontinued operations.
China Farms
For the 2022 Financial Year, our farming operations in China consists of our
interest in our Hangu China farm. The comparative period performance not
only includes our interest in our Hangu China farm but also the Ying and
Yutian China Farming hubs up to the date of sale of those hubs in April 2021.
In January 2022 we acquired the remaining non-controlling 15% interest in
the Hangu China farm to help simplify the sale process of the farm.
The performance of Hangu China farm is relatively stable year-on-year.
The $28 million decrease in EBIT for our farming operations in China is due
to the comparative period including the Ying and Yutian China Farming hubs.
We continue to actively market the Hangu China farm and expect the sale
to be completed within one year.
DPA Brazil
DPA Brazil’s EBIT increased $2 million relative to the comparative period.
While the business achieved improved sales prices and margins on several
of its consumer products, this was largely offset by lower sales volumes
and increased operating expenses due to higher administration costs and
advertising and promotion activity.
The sale process of DPA Brazil had previously been impacted by COVID-19,
but we expect the sale to be completed within one year.
3839
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Historical Summary
TOTAL GROUP OVERVIEW (CONTINUING AND DISCONTINUED OPERATIONS)
JAN 2018JAN 2019JAN 2020JAN 2021JAN 2022
Income Statement Measures
Sales volumes ('000 MT)2,0032,0752,0371,9961,921
Normalised revenue ($ million)9,8369,74510,4239,91510,797
Normalised EBITDA ($ million)
1
7335969071,004921
Normalised EBIT ($ million)
1
458312584684607
Normalised profit after tax attributable to equity holders of the Co-operative ($ million)24268283399348
Reported earnings per share(0.22)0.040.320.230.22
Normalised earnings per share0.150.040.180.250.22
Revenue Margin Analysis
EBITDA margin (%)
1
7. 4%6.1%8.7%10.1%8.5%
EBIT margin (%)
1
4.7%3.2%5.6%6.9%5.6%
Profit after tax margin (%)
1
2.5%0.7%2.7%4.0%3.2%
Cash Flow ($ million)
Operating cash flow(292)(612)(124)(544)(617)
Free cash flow
1
(690)(782)369(632)(849)
Net working capital
1
5,3565,3966,1966,2397, 5 0 0
Capital Measures
Equity excluding hedge reserve ($ million)6,6246,6076,4926,8077, 0 9 3
Adjusted net debt ($ million)
1
7, 47 27, 61 16,1016,1085,607
Gearing ratio (%)
1
51.5%53.5%44.2%47. 3%4 4 .1%
Capital expenditure ($ million)
1
346316112147180
ASIA PACIFIC
2,3
JAN 2020JAN 2021JAN 2022
Ingredients
Sales volumes ('000 MT)
4
287280251
Normalised revenue ($ million)1,7611,6361 ,764
Normalised gross profit ($ million)157175196
Normalised gross margin (%)
1
8.9%10.7%11 .1%
Normalised EBIT ($ million)546585
Normalised EBIT margin (%)
1
3.1%4.0%4.8%
Foodservice
Sales volumes ('000 MT)
4
898284
Normalised revenue ($ million)542469482
Normalised gross profit ($ million)10411865
Normalised gross margin (%)
1
19.2%25.2%13.5%
Normalised EBIT ($ million)3252(4)
Normalised EBIT margin (%)
1
5.9%11.1%(0.8)%
Consumer
Sales volumes ('000 MT)
4
312310300
Normalised revenue ($ million)1,2051,2941,241
Normalised gross profit ($ million)341364307
Normalised gross margin (%)
1
28.3%28.1%24.7%
Normalised EBIT ($ million)8511977
Normalised EBIT margin (%)
1
7. 1%9.2%6.2%
Total
Sales volumes ('000 MT)
4
688672635
Normalised revenue ($ million)3,5083,3993,487
Normalised gross profit ($ million)602657568
Normalised gross margin (%)
1
17. 2 %19.3%16.3%
Normalised EBIT ($ million)171236158
Normalised EBIT margin (%)
1
4.9%6.9%4.5%
ASIA PACIFIC – AUSTRALIA
2,3,5
JAN 2020JAN 2021JAN 2022
Total
Milk collection (million kgMS)706968
Sales volumes ('000 MT)
4
198174172
Normalised revenue ($ million)1,000899916
Normalised gross profit ($ million)109103137
Normalised gross margin (%)
1
10.9%11.5%15.0%
Normalised EBIT ($ million)373259
Normalised EBIT margin (%)
1
3.7%3.6%6.4%
4041
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

AMENA
2,3
JAN 2020JAN 2021JAN 2022
Ingredients
Sales volumes ('000 MT)
4
471417401
Normalised revenue ($ million)2,9482,4772,900
Normalised gross profit ($ million)371293345
Normalised gross margin (%)
1
12.6%11.8%11.9%
Normalised EBIT ($ million)204140184
Normalised EBIT margin (%)
1
6.9%5.7%6.3%
Foodservice
Sales volumes ('000 MT)
4
273036
Normalised revenue ($ million)134163197
Normalised gross profit ($ million)142214
Normalised gross margin (%)
1
10.4%13.5%7. 1%
Normalised EBIT ($ million)(6)8–
Normalised EBIT margin (%)
1
(4.5)%4.9%–
Consumer
Sales volumes ('000 MT)
4
169180194
Normalised revenue ($ million)543557636
Normalised gross profit ($ million)136155176
Normalised gross margin (%)
1
25.0%27. 8 %2 7. 7 %
Normalised EBIT ($ million)265266
Normalised EBIT margin (%)
1
4.8%9.3%10.4%
Total
Sales volumes ('000 MT)
4
667627631
Normalised revenue ($ million)3,6253,1973,733
Normalised gross profit ($ million)521470535
Normalised gross margin (%)
1
14.4%14.7%14.3%
Normalised EBIT ($ million)224200250
Normalised EBIT margin (%)
1
6.2%6.3%6.7%
AMENA – LATIN AMERICA
2,3,5
JAN 2020JAN 2021JAN 2022
Total
Sales volumes ('000 MT)
4
165182192
Normalised revenue ($ million)450489538
Normalised gross profit ($ million)128138162
Normalised gross margin (%)
1
28.4%28.2%30.1%
Normalised EBIT ($ million)254162
Normalised EBIT margin (%)
1
5.6%8.4%11.5%
GREATER CHINA
2,3
JAN 2020JAN 2021JAN 2022
Ingredients
Sales volumes ('000 MT)
4
389399378
Normalised revenue ($ million)1,9301,9032,234
Normalised gross profit ($ million)193172227
Normalised gross margin (%)
1
10.0%9.0%10.2%
Normalised EBIT ($ million)11691144
Normalised EBIT margin (%)
1
6.0%4.8%6.4%
Foodservice
Sales volumes ('000 MT)
4
149148146
Normalised revenue ($ million)8459371,006
Normalised gross profit ($ million)181255173
Normalised gross margin (%)
1
21.4%27. 2 %1 7. 2 %
Normalised EBIT ($ million)12119489
Normalised EBIT margin (%)
1
14.3%20.7%8.8%
Consumer
Sales volumes ('000 MT)
4
414644
Normalised revenue ($ million)177221212
Normalised gross profit ($ million)686958
Normalised gross margin (%)
1
38.4%31.2%27.4%
Normalised EBIT ($ million)393
Normalised EBIT margin (%)
1
1.7%4.1%1.4%
Total
Sales volumes ('000 MT)
4
579593568
Normalised revenue ($ million)2,9523,0613,452
Normalised gross profit ($ million)442496458
Normalised gross margin (%)
1
15.0%16.2%13.3%
Normalised EBIT ($ million)240294236
Normalised EBIT margin (%)
1
8.1%9.6%6.8%
4243
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

NEW ZEALAND MILK AND NON-NEW ZEALAND MILK
2,3
JAN 2020JAN 2021JAN 2022
New Zealand Milk
Sales volumes ('000 MT)1,5161,4801,413
Normalised revenue ($ million)8,5848,1449,019
Normalised gross profit ($ million)1,3351,3991,243
Normalised gross margin (%)
1
15.6%17. 2 %13.8%
Normalised EBIT ($ million)493582486
Normalised EBIT margin (%)
1
5.7%7. 1%5.4%
Non-New Zealand Milk
Sales volumes ('000 MT)412395403
Normalised revenue ($ million)1,4871,4531,569
Normalised gross profit ($ million)253252306
Normalised gross margin (%)
1
17. 0 %17. 3%19.5%
Normalised EBIT ($ million)6870115
Normalised EBIT margin (%)
1
4.6%4.8%7. 3 %
Total
Sales volumes ('000 MT)1,9281,8751,816
Normalised revenue ($ million)10,0719,59710,588
Normalised gross profit ($ million)1,5881,6511,549
Normalised gross margin (%)
1
15.8%17. 2 %14.6%
Normalised EBIT ($ million)561652601
Normalised EBIT margin (%)
1
5.6%6.8%5.7%
DISCONTINUED OPERATIONS
2,6
JAN 2019JAN 2020JAN 2021JAN 2022
China Farms
Sales volumes ('000 MT)910111
Normalised revenue ($ million)11013513513
Normalised gross profit ($ million)(13)1122(2)
Normalised gross margin (%)
1
(11.8)%8.1%16.3%(15.4)%
Normalised EBIT ($ million)(18)920(8)
DPA Brazil
Sales volumes ('000 MT)9599110104
Normalised revenue ($ million)207217183196
Normalised gross profit ($ million)54694960
Normalised gross margin (%)
1
26.2%31.8%26.8%30.6%
Normalised EBIT ($ million)(5)141214
Notes to the Historical Financial Summary
1. Refer to Glossary for definition.
2. Percentages as shown in table may not align to calculations of percentages based on numbers in the table due to rounding of figures.
3. Prepared on a continuing operations basis and includes normalisation adjustments. Comparative information includes re-presentations for consistency with the current period.
4. Includes sales to other segments.
5. Exclusive of Group Operations’ attribution.
6. The China Farms business and DPA Brazil consumer and foodservice businesses both meet the definition of a discontinued operation. The Group’s China Farms business comprises our Hangu China farm
and, up to the date of sale, its two-wholly owned farming hubs in Ying and Yutian.
4445
FONTERRA INTERIM REPORT 2022BUSINESS PERFORMANCE

Contents
INCOME STATEMENT48
STATEMENT OF COMPREHENSIVE INCOME49
STATEMENT OF FINANCIAL POSITION50
STATEMENT OF CHANGES IN EQUITY52
CASH FLOW STATEMENT53
BASIS OF PREPARATION55
NOTES TO THE INTERIM FINANCIAL STATEMENTS56
INDEPENDENT REVIEW REPORT68
Interim Financial Results
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
4647
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Statement of Comprehensive Income
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
Income Statement
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
1 Comparative information includes re-presentations for consistency with the current period. Re-presentations have had no impact on the totals or sub-totals presented in the Income Statement.
NOTES
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
1

31 JUL 2021
AUDITED
1
Continuing operations
Revenue from sale of goods310,5889,59720,565
Cost of goods sold4(9,039)( 7, 9 4 6 )(17, 5 81)
Gross profit1,5491,6512,984
Other operating income5028129
Selling and marketing expenses(270)(263)(574)
Distribution expenses(248)(236)(476)
Administrative expenses(353)(382)(816)
Other operating expenses(133)(199)(365)
Share of profit of equity accounted investments635
Profit before net finance costs and tax from continuing operations601602887
Finance income559
Finance costs(95)(143)(261)
Net finance costs(90)(138)(252)
Profit before tax from continuing operations511464635
Tax exp ense(140)(125)(103)
Profit after tax from continuing operations371339532
Discontinued operations
(Loss)/profit after tax from discontinued operations2(7)5267
Profit after tax364391599
Profit after tax is attributable to:
Profit attributable to equity holders of the Co-operative348372578
Profit attributable to non-controlling interests161921
Profit after tax364391599

GROUP $
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Earnings per share:
Basic and diluted earnings per share from continuing operations0.220.200.31
Basic and diluted earnings per share from discontinued operations–0.030.05
Basic and diluted earnings per share0.220.230.36
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Profit after tax364391599
Items that may be reclassified subsequently to the Income Statement:
Cash flow hedges and other costs of hedging, net of tax(366)250(127)
Net investment hedges and translation of foreign operations, net of tax89(106)(112)
Foreign currency translation reserve (gains)/losses transferred to the Income Statement(1)14(14)
Other reserve movements12–(3)
Total items that may be reclassified subsequently to the Income Statement(266)158(256)
Items that will not be reclassified subsequently to the Income Statement:
Net fair value (losses)/gains on investments in shares(3)25
Foreign currency translation gains attributable to non-controlling interests43–
Movements in reserves attributable to non-controlling interests6(2)(2)
Total items that will not be reclassified subsequently to the Income Statement733
Total other comprehensive (expense)/income(259)161(253)
Total comprehensive income105552346
Total comprehensive income is attributable to:
Equity holders of the Co-operative 79532327
Non-controlling interests262019
Total comprehensive income105552346
Total comprehensive income arises from:
Continuing operations92475297
Discontinued operations137749
Total comprehensive income105552346
4849
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Statement of Financial Position
AS AT 31 JANUARY 2022
Statement of Financial Position (CONTINUED)
AS AT 31 JANUARY 2022
NOTES
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
1
31 JUL 2021
AUDITED
1
ASSETS
Current assets
Cash and cash equivalents479345985
Trade and other receivables 2,1831,9221,802
Inventories7, 2 4 35,8963,766
Intangible assets642247
Tax receivable565931
Derivative financial instruments 229862249
Investment in Beingmate–40–
Other current assets 938295
Assets held for sale24751,078462
Total current assets10,82210,3067, 437
Non-current assets
Property, plant and equipment5,9135,8935,979
Right-of-use assets446527486
Equity accounted investments 999191
Intangible assets2,2502,1812,195
Deferred tax assets562238460
Derivative financial instruments466468437
Long-term advances161163163
Other non-current assets 978893
Total non-current assets9,9949,6499,904
Total assets20,81619,95517,341
LIABILITIES
Current liabilities
Bank overdraft841720
Borrowings75961,144818
Trade and other payables 2,2201,8462,208
Owing to suppliers4,0643,2521,825
Tax payable1619387
Derivative financial instruments7295484
Provisions455672
Other current liabilities587157
Liabilities held for sale2545584542
Total current liabilities 8,5027, 1 175,713
Non-current liabilities
Borrowings75,1525,1084,254
Derivative financial instruments 333442359
Provisions836782
Deferred tax liabilities302425
Other non-current liabilities153939
Total non-current liabilities 5,6135,6804,759
Total liabilities14,11512,79710,472
Net assets6,7017, 1 5 86,869
1 Comparative information includes re-presentations for consistency with the current period.1 Comparative information includes re-presentations for consistency with the current period.
NOTES
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
1
31 JUL 2021
AUDITED
1
EQUITY
Subscribed equity55,8925,8925,892
Retained earnings1,4561,2241,350
Foreign currency translation reserve(267)(321)(355)
Hedge reserves(392)351(26)
Other reserves1122
Total equity attributable to equity holders of the Co-operative6,7007, 14 86,863
Non-controlling interests1106
Total equity6,7017, 1 5 86,869
The Board approved and authorised for issue these Interim Financial Statements on 16 March 2022.
For and on behalf of the Board:


PETER MCBRIDE BRUCE HASSALL
Chairman Director
5051
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Cash Flow Statement
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
Statement of Changes in Equity
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
GROUP $ MILLION
ATTRIBUTABLE TO EQUITY HOLDERS OF THE CO-OPERATIVE
NON-
CONTROLLING
INTERESTS
TOTAL
EQUITY
SUBSCRIBED
EQUITY
RETAINED
EARNINGS
FOREIGN
CURRENCY
TRANSLATION
RESERVE
HEDGE
RESERVES
OTHER
RESERVESTOTAL
As at 1 August 20215,8921,350(355)(26)26,86366,869
Profit after tax–348–––34816364
Other comprehensive income/(expense) ––88(366)9(269)10(259)
Total comprehensive income/(expense) –34888(366)97926105
Transactions with equity holders in their
capacity as equity holders:
Dividends paid to equity holders of the
Co-operative (refer to Note 6)–(242)–––(242)–(242)
Dividends paid to non-controlling interests––––––(31)(31)
As at 31 January 2022 (unaudited)5,8921,456(267)(392)116,70016,701
As at 1 August 2020 5,887933(229)101–6,692116,703
Profit after tax–372–––37219391
Other comprehensive (expense)/income––(92)25021601161
Total comprehensive income/(expense) –372(92)250253220552
Transactions with equity holders in their
capacity as equity holders:
Dividends paid to equity holders of the
Co-operative (refer to Note 6)–(81)–––(81)–(81)
Equity instruments issued (refer to Note 5)5––––5–5
Dividends paid to non-controlling interests––––––(21)(21)
As at 31 January 2021 (unaudited)5,8921,224(321)35127, 14 8107, 1 5 8
As at 1 August 20205,887933(229)101–6,692116,703
Profit after tax–578–––57821599
Other comprehensive (expense)/income ––(126)(127)2(251)(2)(253)
Total comprehensive income/(expense) –578(126)(127)232719346
Transactions with equity holders in their
capacity as equity holders:
Dividends paid to equity holders of the
Co-operative (refer to Note 6) –(161)–––(161)–(161)
Equity instruments issued (refer to Note 5)5––––5–5
Dividends paid to non-controlling interests––––––(24)(24)
As at 31 July 2021 (audited)5,8921,350(355)(26)26,86366,869
The Cash Flow Statement presents total Group cash flows from continuing and discontinued operations.
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
1
31 JUL 2021
AUDITED
Cash flows from operating activities
Profit before net finance costs and tax from continuing operations601602887
Profit before net finance costs and tax from discontinued operations65572
Total Group profit before net finance costs and tax607657959
Adjustments for:
– Depreciation and amortisation314320642
– Foreign exchange losses/(gains) 81(220)(136)
– Gain on sale of Ying and Yutian China farms––(32)
– Gain on sale of investment in Falcon China Farms JV––(40)
– Loss on sale of investment in Beingmate–5049
– China Farms impairment reversal–(23)(23)
– Brazil consumer and foodservice business impairment––39
– Other (1)(8)(9)
Total adjustments394119490
(Increase)/decrease in working capital:
– Trade and other receivables(308)(75)11
– Inventories(3,514)(2,658)(556)
– Trade and other payables47(163)199
– Owing to suppliers2,2381,664238
– Other movements (38)(30)(63)
Total increase in working capital(1,575)(1,262)(171)
Net cash flows from operations(574)(486)1,278
Net taxes paid(43)(58)(84)
Net cash flows from operating activities(617)(544)1,194
Cash flows from investing activities
Cash was provided from:
– Proceeds from sale of businesses132638
– Proceeds from disposal of property, plant and equipment359
– Proceeds from sale of livestock11925
– Proceeds from sale of investments–71110
Cash was applied to:
– Acquisition of property, plant and equipment (194)(162)(441)
– Acquisition of livestock (including rearing costs)(2)(20)(28)
– Acquisition of intangible assets(40)(30)(80)
– Other cash outflows(1)(3)(10)
Net cash flows from investing activities(232)(88)223
1 Comparative information includes re-presentations for consistency with the current period.
5253
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Basis of Preparation
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
1
31 JUL 2021
AUDITED
Cash flows from financing activities
Cash was provided from:
– Proceeds from borrowings2,5451,6722,402
– Interest received7510
– Other cash inflows–3227
Cash was applied to:
– Interest paid(155)(154)(308)
– Repayment of borrowings(1,866)(1,219)(3,142)
– Dividends paid to equity holders of the Co-operative(242)(76)(157)
– Dividends paid to non-controlling interests(31)(21)(24)
Net cash flows from financing activities258239(1,192)
Net (decrease)/increase in cash(591)(393)225
Opening cash982780780
Effect of exchange rate changes15(19)(23)
Closing cash406368982
Reconciliation of closing cash balances to the Statement of Financial Position:
Cash and cash equivalents479345985
Bank overdraft(84)(17)(20)
Cash balances included in held for sale114017
Closing cash406368982
Cash Flow Statement (CONTINUED)
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
a) General information
Fonterra Co-operative Group Limited (Fonterra, the Company or the
Co-operative) is a multinational dairy co-operative. Fonterra is primarily
involved in the collection, manufacture and sale of milk and milk-derived
products through its Ingredients, Consumer and Foodservice channels.
Fonterra is incorporated and domiciled in New Zealand. Fonterra is registered
under the Companies Act 1993 and the Co-operative Companies Act
1996, and is an FMC Reporting Entity under the Financial Markets Conduct
Act 2013. Fonterra is also required to comply with the Dairy Industry
Restructuring Act 2001.
b) Basis of preparation
These Interim Financial Statements comprise Fonterra and its subsidiaries
(together referred to as the Group) and the Group’s interests in its equity
accounted investments.
These unaudited Interim Financial Statements:
–comply with International Accounting Standard 34 Interim Financial Reporting;
–comply with New Zealand Equivalent to International Accounting Standard
34 Interim Financial Reporting;
–have been prepared in accordance with Generally Accepted Accounting
Practice (GAAP) applicable to for-profit entities;
–are presented in New Zealand dollars ($ or NZD), which is Fonterra’s
functional currency, and rounded to the nearest million, except where
otherwise stated; and
–do not include all the information and disclosures required in the Annual
Financial Statements, and should be read in conjunction with the Group’s
Financial Statements for the year ended 31 July 2021.
The Group’s operations are seasonal due to the profile of milk production in
New Zealand. Milk production, and therefore the Group’s milk collections
and production volumes are higher in the New Zealand Spring (October
and November). Consequently, the amount owing to suppliers, inventory
balances and borrowings are higher at the 31 January interim reporting dates
compared to the 31 July year-end reporting dates. This reflects the higher
cash outflows required to support the business operations in the first six
months of the financial year. Due to the seasonality of the Group’s operations
additional comparative information has been presented in these Interim
Financial Statements.
Re-presentations
Income Statement
Certain comparative period information has been re-presented for
consistency with the current period presentation.
Re-presentations have had no impact on the totals or sub-totals presented
in the Income Statement.
Balance Sheet
During the period ended 31 January 2022 the Group reassessed the current/
non-current classification of Emissions units held for compliance purposes.
Emissions units held for compliance purposes expected to be surrendered
within twelve months are classified as current intangible assets.
Previously the Group presented all Emissions units held for compliance
purposes as non-current intangible assets.
Comparative period information has been re-presented for consistency
with the current period presentation.
c) Material accounting policies
The accounting policies applied in the preparation of these Interim Financial
Statements are consistent with those applied in the Group’s Financial
Statements for the year ended 31 July 2021.
d) Significant judgements and estimates
In the process of applying the Group’s accounting policies and the application
of accounting standards, a number of judgements and estimates have been
made. Sources of significant judgement and estimation uncertainty in
preparing these Interim Financial Statements were consistent with those
disclosed in the Group’s Financial Statements for the year ended 31 July 2021.
Impairment
At 31 January 2022 the Group assessed whether there were any indicators
of asset impairment. As market capitalisation was below the carrying
amount of the Group’s net assets, an impairment test was performed,
and no impairment was identified.
Forecast Farmgate Milk Price
The Farmgate Milk Price is the average price paid by Fonterra in a season,
which is the 12 months ending 31 May, for each kilogram of milk solids
(kgMS) supplied by farmer shareholders under Fonterra’s standard terms of
supply. The Farmgate Milk Price for a season is finalised after the end of that
milk season. Global dairy commodity prices that inform the Farmgate Milk
Price revenue are the most significant driver of the level of each season’s
Farmgate Milk Price.
Within the forecast Farmgate Milk Price, the majority of the milk sourced up
until 31 January 2022 is contracted for sale at hedged NZD/USD exchange
rates. This means that the Farmgate Milk Price revenue that would be earned
from the milk sourced during the six months ended 31 January 2022 is
largely known.
The full season forecast Farmgate Milk Price remains uncertain. This is
because the Farmgate Milk Price revenue that will be earned from milk
supplied during the remainder of the milk season ending 31 May 2022
is impacted by future global dairy commodity prices. Future global dairy
commodity prices in USD are uncertain as they are influenced by global
supply and demand dynamics, and their conversion to NZD is uncertain
because the conversion of these USD selling prices to NZD depends on
the NZD/USD exchange rate and associated hedging.
1 Comparative information includes re-presentations for consistency with the current period.
5455
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Notes to the Interim Financial Statements
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
NOTEPAGE
Performance
1 Segment reporting57
2 Divestments61
3 Revenue from sale of goods63
4 Cost of goods sold63
Debt and Equity
5 Subscribed equity instruments64
6 Dividends64
7 Borrowings65
Other
8 Contingent liabilities, provisions and commitments66
9 Fair value measurement66
10 Net tangible assets per quoted equity security67

Performance
1. SEGMENT REPORTING
Segment information provided in this note reflects the Group’s performance from continuing operations only. The China Farms and Brazil consumer and
foodservice businesses are considered discontinued operations and have been excluded from the disclosures in this note. Please see Note 2 Divestments
for further details about the Group’s discontinued operations.
a) Reportable segments
Operating segments reflect the way financial information is regularly reviewed by the Fonterra Management Team (FMT). The FMT is considered to be the
Chief Operating Decision Maker. The FMT consists of the Group CEO, CFO and Chief Operating Officer, the CEOs of the three customer-facing regional
business units (Asia Pacific, AMENA and Greater China), the Managing Director People & Culture and the Managing Director Co-operative Affairs.
The measure of profit or loss used by the FMT to evaluate the underlying performance of operating segments is normalised earnings before interest and tax
(normalised EBIT).
The Group’s operating model is based around the three customer-facing regional business units, supported by a shared infrastructure, referred to as Group
Operations which comprises:
–the functions under the Chief Operating Office (COO) and includes New Zealand milk collection and processing operations and assets, supply chain,
Group IT, Sustainability and Innovation;
–Fonterra Farm Source™ retail stores; and
–the Central Portfolio Management function (CPM).
The operating model forms the basis for the Group’s operating segments. Under the operating model, the business is managed as a matrix form organisation,
whereby customer-facing regional business unit CEOs and the FMT members that have responsibility for COO and CPM have overlapping responsibility
for performance. Information about the performance of Group Operations is reported to the FMT both separately and attributed to each of the regional
business units.
The Group has determined that its reportable segments are Asia Pacific, AMENA and Greater China, inclusive of their respective attribution of Group
Operations. This presentation provides a full end-to-end view of performance for each of the customer facing regional business units.
REPORTABLE SEGMENTSDESCRIPTION
Asia PacificRepresents the Ingredients, Foodservice and Consumer channels in New Zealand, Australia, Pacific Islands, South East Asia and
South Asia.
AMENARepresents the Ingredients, Foodservice and Consumer channels in Africa, Middle East, Europe, North Asia and Americas.
Greater ChinaRepresents the Ingredients, Foodservice and Consumer channels in Greater China.
The performance of large multi-national customers are reported within the reportable segment that they are managed by. This can differ from the geographical
region of the destination of goods sold.
The attribution of Group Operations to reportable segments and transactions between reportable segments follow underlying business rules. These rules have
been designed to reflect the end-to-end contribution of each reportable segment.
Where there is common activity amongst segments and there is an attribution of those revenues and costs across segments, the attribution is based on
a number of principles. These principles include:
–activity based allocation where appropriate; and
–share of product sold/manufactured in the segment.
The performance of Fonterra Farm Source™ retail stores are attributed to the Asia Pacific reportable segment.
The Group regularly reviews the application of these principles to ensure they continue to remain appropriate and where possible to expand the portion
attributed using activity based principles. Where appropriate, comparative information may be re-presented for consistency with the current period attribution.
Compared to the six months ended 31 January 2021, the Group has continued to refine its approach to attributing the change in the cost of milk across the
season. Comparative information has been re-presented for consistency with the current period.
Unallocated costs represent corporate costs including Co-operative Affairs and Group Functions.
5657
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Notes to the Interim Financial Statements (CONTINUED)
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
a) Reportable segments continued
GROUP $ MILLION
YEAR ENDED 31 JULY 2021 (AUDITED)
ASIA
PACIFICAMENA
GREATER
CHINA
UNALLOCATED
COSTS AND
ELIMINATIONSTOTAL
Continuing operations
Sales volume (metric tonnes, thousands)1,3861,3521,176(40)3, 874
Revenue from sale of goods7, 1 107, 3 0 46,312(161)20,565
Cost of goods sold(5,915)(6,400)(5,476)210(17, 5 81)
Normalised gross profit1,195904836492,984
Operating expenses(889)(605)(436)(223)(2,153)
Other¹(1)3732665
Normalised EBIT305336403(148)896
Normalisation adjustments:
–Falcon China Farms JV gain on sale/(impairment)––40–40
–Income Statement impact of Beingmate investment––(49)–(49)
Profit before net finance costs and tax305336394(148)887
Other segment information:
–Inter-segment revenue1556–(161)–
–Depreciation and amortisation(242)(196)(182)(22)(642)
–Share of (loss)/profit of equity accounted investments(3)6–25
1 Comprises other operating income, net foreign exchange gains/(losses) and share of profit/(loss) of equity accounted investments.
a) Reportable segments continued
GROUP $ MILLION
SIX MONTHS ENDED 31 JANUARY 2022 (UNAUDITED)
ASIA
PACIFICAMENA
GREATER
CHINA
UNALLOCATED
COSTS AND
ELIMINATIONSTOTAL
Continuing operations
Sales volume (metric tonnes, thousands)635631568(18)1,816
Revenue from sale of goods3,4873,7333,452(84)10,588
Cost of goods sold(2,919)(3,198)(2,994)72(9,039)
Normalised gross profit568535458(12)1,549
Operating expenses(423)(307)(233)(48)(1,011)
Other¹1322111763
Normalised EBIT158250236(43)601
Profit before net finance costs and tax158250236(43)601
Other segment information:
–Inter-segment revenue6519–(84)–
–Depreciation and amortisation(114)(95)(95)(10)(314)
–Share of profit of equity accounted investments–6––6
1 Comprises other operating income, net foreign exchange gains/(losses) and share of profit/(loss) of equity accounted investments.
GROUP $ MILLION
SIX MONTHS ENDED 31 JANUARY 2021 (UNAUDITED)
1
ASIA
PACIFICAMENA
GREATER
CHINA
UNALLOCATED
COSTS AND
ELIMINATIONSTOTAL
Continuing operations
Sales volume (metric tonnes, thousands)672627593(17)1,875
Revenue from sale of goods3,3993,1973,061(60)9,597
Cost of goods sold(2,742)(2,727)(2,565)88( 7, 9 4 6 )
Normalised gross profit657470496281,651
Operating expenses(423)(279)(200)(111)(1,013)
Other
2
29(2)514
Normalised EBIT236 200294(78)652
Normalisation adjustments
–Income Statement impact of Beingmate investment––(50)–(50)
Profit before net finance costs and tax236200244(78)602
Other segment information:
–Inter-segment revenue591–(60)–
–Depreciation and amortisation(121)(95)(92)(12)(320)
–Share of profit/(loss) of equity accounted investments(1)3–13
1 Comparative information includes re-presentations for consistency with the current period.
2 Comprises other operating income, net foreign exchange gains/(losses) and share of profit/(loss) of equity accounted investments.
5859
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Notes to the Interim Financial Statements (CONTINUED)
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
b) Geographical analysis of revenue
Revenue is analysed by geography on the basis of the destination of the goods sold. Geographical groupings in the following table are not aligned with the
Group’s reportable segments.
GROUP $ MILLION
NEW
ZEALANDAUSTRALIACHINAREST OF ASIA AMERICAS
REST OF
WORLDTOTAL
Geographical external revenue
Six months ended 31 January 2022 (unaudited)9917843,2303,4511,35278010,588
Six months ended 31 January 2021 (unaudited)8048292,8973,2271,1966449,597
Year ended 31 July 2021 (audited)1,7261,6996,1197, 0 5 62,5971,36820,565
c) Geographical analysis of non-current assets
Geographical groupings in the following table are not aligned with the Group’s reportable segments.
GROUP $ MILLION
NEW
ZEALANDAUSTRALIACHINAREST OF ASIA AMERICAS
REST OF
WORLDTOTAL
Geographical non-current assets
As at 31 January 2022 (unaudited)6,535961158223842498,966
As at 31 January 2021 (unaudited)
1
6,502997147743932638,943
As at 31 July 2021 (audited)
1
6,602970177773882539,007
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
AS AT
31 JAN 2021
UNAUDITED
1
AS AT
31 JUL 2021
AUDITED
1

Reconciliation of geographical non-current assets to total non-current assets
Geographical non-current assets 8,9668,9439,007
Deferred tax assets562238460
Derivative financial instruments 466468437
Total non-current assets9,9949,6499,904
1 Comparative information includes re-presentations for consistency with the current period.
2 DIVESTMENTS
This note provides information about the Group’s disposal groups held for sale and discontinued operations for the six months ended 31 January 2022.
There were no material divestments by the Group during the six months ended 31 January 2022.
a) Disposal groups held for sale
The major classes of assets and liabilities held for sale are shown in the table below.
ASSETS AND LIABILITIES HELD FOR SALE
$ MILLION
AS AT 31 JAN 2022
UNAUDITED
AS AT 31 JAN 2021
UNAUDITED
AS AT 31 JUL 2021
AUDITED
Cash and cash equivalents114017
Trade receivables467439
Inventory338137
Property, plant and equipment8129879
Livestock2326025
Intangible assets127123122
Other assets154202143
Total assets held for sale4751,078462
Borrowings 310274282
Trade and other payables 146206150
Provisions414954
Other liabilities485556
Total liabilities held for sale545584542
Net (liabilities)/assets held for sale(70)494(80)
Hangu China farm
In January 2022 the Group purchased the remaining non-controlling interest in the Hangu China farm.
At 31 January 2022 the Group remains committed to the sale and the farm continues to be actively marketed. The Group expects the sale to be completed
within one year of reporting date. The Group reassessed the fair value less costs to sell of the Hangu China farm and no further adjustment has been recognised.
The foreign currency translation reserve at 31 January 2022 attributable to the Hangu China farm was a debit balance of $4 million (31 January 2021: credit
balance of $1 million, 31 July 2021: debit balance of $1 million).
Brazil consumer and foodservice business
At 31 January 2022 the Group remains committed to the sale and the business continues to be actively marketed. The Group expects the sale to be completed
within one year of the reporting date. The Group reassessed the fair value less costs to sell of the business and no further adjustment has been recognised.
The foreign currency translation reserve balance at 31 January 2022 attributable to the Brazil consumer and foodservice business was a debit balance of
$62 million (31 January 2021: debit balance of $60 million, 31 July 2021: debit balance of $63 million).
6061
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Notes to the Interim Financial Statements (CONTINUED)
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
b) Discontinued operations
In the current period, the China Farms business comprises solely the Hangu China farm. In the comparative interim and annual periods, the China Farms
business also included the Ying and Yutian farms, up to the date of sale.
The summarised financial performance of the China Farms business and Brazil consumer and foodservice business, recognised in (loss)/profit after tax from
discontinued operations in the Income Statement, is shown in the table below.
DISCONTINUED OPERATIONS
$ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Revenue from sale of goods209318559
Cost of goods sold(151)(247)(429)
China Farms impairment reversal–2323
Gross profit5894153
Other operating income–518
Total operating expenses (52)(44)(92)
Gain on sale of Ying and Yutian China farms––32
Brazil consumer and foodservice impairment––(39)
Profit before net finance costs and tax65572
Net finance costs(13)(3)(10)
(Loss)/profit before tax(7)5262
Tax credit––5
(Loss)/profit after tax from discontinued operations(7)5267
Share of loss/(profit) attributable to non-controlling interests1(3)13
(Loss)/profit after tax attributable to equity holders (6)4980
Movement in exchange differences on translation of discontinued operations8222
Foreign currency translation reserve gains transferred to the Income Statement––(19)
Other reserve movements113(1)
Total comprehensive income from discontinued operations137749
Net cash outflow from operating activities(11)(5)(8)
Net cash (outflow)/inflow from investing activities(3)(5)510
Net cash inflow/(outflow) from financing activities510(6)
Net (decrease)/increase in cash generated by the discontinued operations(9)–496
3 REVENUE FROM SALE OF GOODS
Revenue is disaggregated by Ingredients, Foodservice and Consumer channels across the Group’s reportable segments in the following table.
GROUP $ MILLION
ASIA PACIFICAMENAGREATER CHINATOTAL
For the six months ended 31 January 2022 (unaudited)
Ingredients channel revenue1,7122,8892,2346,835
Foodservice channel revenue4801901,0061 ,676
Consumer channel revenue1,2306352122,077
Revenue from sale of goods3,4223,7143,45210,588
For the six months ended 31 January 2021 (unaudited)
1
Ingredients channel revenue1,5902,4761,9035,969
Foodservice channel revenue4681639371,568
Consumer channel revenue1,2825572212,060
Revenue from sale of goods3,3403,1963,0619,597
For the year ended 31 July 2021 (audited)
Ingredients channel revenue3,5215,7834,25913,563
Foodservice channel revenue9283331,6912,952
Consumer channel revenue2,5061,1823624,050
Revenue from sale of goods6,9557, 2 9 86,31220,565
1 Comparative information includes re-presentations for consistency with the current period.
Refer to Note 1 Segment reporting for revenue disaggregated by geography on the basis of the destination of the goods sold.
4 COST OF GOODS SOLD
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Opening inventory3,7663,2683,268
Cost of milk:
–New Zealand sourced8,8297, 2 1 511,660
–Non-New Zealand sourced635577994
Other costs3,0522,7825,425
Closing inventory( 7, 2 4 3)(5,896)(3,766)
Total cost of goods sold9,0397, 9 4 617, 5 81
Other costs include purchases of other products, raw materials, packaging, direct labour costs, depreciation and other costs directly incurred to bring inventory
to its final point of sale location.
6263
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Notes to the Interim Financial Statements (CONTINUED)
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
Debt and equity
5 SUBSCRIBED EQUITY INSTRUMENTS
a) Co-operative shares, including shares held within the Group
Co-operative shares may only be held by a shareholder supplying milk to Fonterra (farmer shareholder), by former farmer shareholders for up to three seasons
after cessation of milk supply, or by Fonterra Farmer Custodian Limited (the Custodian). Voting rights in Fonterra are dependent on milk supply supported by
Co-operative shares, these rights are also attached to vouchers when backed by milk supply (subject to limits).
The rights attaching to Co-operative shares are set out in Fonterra’s Constitution, available in the ‘Our Co-operative/Governance and Management’ section of
Fonterra’s website.
At 31 January 2022 there were 1,613,357,879 Co-operative shares on issue (31 January 2021: 1,613,357,879 shares, 31 July 2021: 1,613,357,879 shares).
During the six months ended 31 January 2022, Fonterra issued:
–No shares under the Dividend Reinvestment Plan (31 January 2021: 1,138,230, 31 July 2021: 1,138,230).
–No shares under the Farm Source Rewards scheme (31 January 2021: 122,582 shares, 31 July 2021: 122,582 shares).
Co-operative shares can be traded between farmer shareholders on the Fonterra Shareholders’ Market (a private market operated by NZX Limited). At a Special
Meeting held on 9 December 2021, Fonterra shareholders voted in favour of capital structure related amendments to Fonterra’s Constitution that would give
effect to the Flexible Shareholding structure. The Constitution amendments and new structure will come into effect once the Fonterra Board is satisfied that
any steps necessary for implementation have been (or will be) completed. The Co-operative is aiming to implement the changes as soon as possible from the
beginning of next season. The current cap on the Fund remains, which suspends the ability for Fonterra farmer shareholders to exchange Fonterra shares for
units in the Fund. A capped Fund is a feature of the Flexible Shareholding structure.
Information about the Group’s capital structure review is available in the ‘Investors/Capital Structure’ section of Fonterra’s website.
b) Units in the Fonterra Shareholders’ Fund (the Fund)
The Custodian holds legal title of Co-operative shares of which the Economic Rights have been sold to the Fund on trust for the benefit of the Fund. As at
31 January 2022 107,417,322 Co-operative shares (31 January 2021: 106,336,396, 31 July 2021: 107,420,162) were legally owned by the Custodian, on trust
for the benefit of the Fund.
During the six months ended 31 January 2022, the Fund issued no units (31 January 2021: 5,111,889 units, 31 July 2021: 11,794,492 units) and redeemed
2,840 units (31 January 2021: 3,357,009 units, 31 July 2021: 8,955,846 units).
The rights attaching to units are set out in the Fonterra Shareholders’ Fund 2021 Annual Report, available in the ‘Investors/Fonterra Shareholders’ Fund’ section
of Fonterra’s website.
6 DIVIDENDS
$ MILLION
SIX MONTHS ENDEDYEAR ENDED
DIVIDENDS
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
2021 Final dividend – 15 cents per share¹242––
2021 Interim dividend – 5 cents per share²––80
2020 Final dividend – 5 cents per share³–8181
1 Declared on 22 September 2021 and paid on 15 October 2021 to all Co-operative shares on issue at 30 September 2021. The Dividend Reinvestment Plan did not apply to this dividend.
2 Declared on 16 March 2021 and paid on 15 April 2021 to all Co-operative shares on issue at 24 March 2021. The Dividend Reinvestment Plan did not apply to this dividend.
3 Declared on 17 September 2020 and paid on 15 October 2020 to all Co-operative shares on issue at 25 September 2020. The Dividend Reinvestment Plan applied to this dividend.
Under Fonterra’s Dividend Reinvestment Plan, eligible shareholders can choose to reinvest all or part of their future dividend in additional Co-operative shares.
Dividend declared after the reporting period
On 16 March 2022, the Board declared an interim dividend of 5 cents per share, to be paid on 14 April 2022 to all Co-operative shares on issue at
24 March 2022.
The Dividend Reinvestment Plan does not apply to this dividend.
7 BORROWINGS
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
AS AT
31 JAN 2021
UNAUDITED
AS AT
31 JUL 2021
AUDITED
Total current borrowings5961,144818
Total non-current borrowings5,1525,1084,254
Total borrowings5, 74 86,2525,072
A breakdown of total borrowings is presented in the following table.
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
AS AT
31 JAN 2021
UNAUDITED
AS AT
31 JUL 2021
AUDITED
Commercial paper21540–
Bank loans96357411
Lease liabilities482558523
Capital notes¹353535
NZX-listed bonds250600600
Medium-term notes3,8034,4453,903
Total borrowings²5, 74 86,2525,072
1 Capital notes are unsecured subordinated borrowings.
2 All borrowings other than lease liabilities and capital notes are unsecured and unsubordinated.
The Group uses the following non-GAAP debt measure in monitoring its net debt position.
Adjusted net debt
Adjusted net debt is total borrowings, plus bank overdraft, less cash and cash equivalents, plus borrowings attributable to disposal groups held for sale, less
cash and cash equivalents attributable to disposal groups held for sale, plus a cash adjustment for 25% of cash and cash equivalents held by the Group’s
subsidiaries (including cash and cash equivalents attributable to disposal groups held for sale), adjusted for derivatives used to manage changes in hedged
risks on debt instruments.
The Group believes that adjusted net debt provides useful information as it is aligned with how certain rating agencies calculate the Group’s debt to EBITDA
and gearing ratios.
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
AS AT
31 JAN 2021
UNAUDITED
1
AS AT
31 JUL 2021
AUDITED
Total borrowings 5, 74 86,2525,072
Plus: Bank overdraft841720
Less: Cash and cash equivalents(479)(345)(985)
Plus: Borrowings attributable to disposal groups held for sale310274282
Less: Cash and cash equivalents attributable to disposal groups held for sale(11)(40)(17)
Plus: Cash adjustment for cash held by subsidiaries12293110
Less: Value of derivatives used to manage changes in hedged risks on debt instruments(167)(143)(157)
Adjusted net debt5,6076,1084,325
1 Previously the Group reported economic net interest-bearing debt. Adjusted net debt is now used as the non-GAAP debt measure in monitoring net debt.
6465
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Notes to the Interim Financial Statements (CONTINUED)
FOR THE SIX MONTHS ENDED 31 JANUARY 2022
Other
8 CONTINGENT LIABILITIES, PROVISIONS AND COMMITMENTS
a) Contingent liabilities
In the normal course of business, the Group is exposed to claims and legal proceedings that may in some cases result in costs.
In June 2020 a class action was filed in the Supreme Court of Victoria against Fonterra Australia Pty. Ltd., Fonterra Milk Australia Pty. Ltd. and Fonterra Brands
(Australia) Pty. Ltd. (collectively, Fonterra Australia) by Geoffrey and Lynden Iddles on behalf of farmers who supplied milk to Fonterra Australia during the
2015/2016 season. The class action relates to actions taken by Fonterra Australia in connection with its milk price in the 2015/2016 season including the
manner in which Fonterra Australia set its opening milk price and forecast closing milk price at the outset of that season, its communications with suppliers
about the milk price throughout the season and its reduction of the milk price in May 2016. The plaintiffs are alleging that Fonterra Australia breached its
contracts with suppliers, engaged in misleading and deceptive conduct and engaged in unconscionable conduct in connection with these matters. Fonterra
is vigorously defending these claims. Given the stage of the litigation and that the plaintiffs have not yet quantified their claim, it is not currently possible to
reliably estimate the amount of any potential exposure in connection with this class action.
b) Commitments
At 31 January 2022 the Group was committed to future capital expenditure for:
GROUP $ MILLION
AS AT
31 JAN 2022
UNAUDITED
AS AT
31 JAN 2021
UNAUDITED
AS AT
31 JUL 2021
AUDITED
Buildings26219
Plant, vehicles and equipment17011692
Software932
Total commitments205121113
9 FAIR VALUE MEASUREMENT
The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the
measurement date.
The fair values of financial assets and liabilities are calculated by reference to quoted market prices where that is possible. A market is regarded as active
if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arm’s length basis.
If quoted market prices are not available, the methodology used to calculate the fair values of financial assets and liabilities is to identify the expected cash
flows under the terms of each specific contract and then discount these values back to the present value. These models use as their basis independently
sourced market data where it is available and rely as little as possible on entity-specific estimates.
The calculation of the fair value of financial instruments reflects the impact of credit risk where applicable.
Specific valuation techniques used to value financial instruments include:
–the fair value of foreign exchange contracts is determined using observable currency exchange rates, option volatilities and interest rate yield curves;
–the fair value of interest rate contracts is calculated as the present value of the estimated future cash flows based on observable interest rate yield curves;
–the fair value of commodity contracts that are not exchange traded is determined by calculating the present value of estimated future cash flows based on
observable quoted prices for similar instruments;
–the fair value on the hedged risks of borrowings and long-term advances that are not exchange traded is calculated as the present value of the estimated
future cash flows based on observable currency exchange rates and interest rate yield curves; and
–the fair value of net assets/(liabilities) held for sale is disclosed in Note 2 Divestments.
Fair value hierarchy
The fair value hierarchy described below is used to provide an indication of the level of estimation or judgement required in determining fair value.
–Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
–Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
–Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change occurred.
9 FAIR VALUE MEASUREMENT continued
The fair value hierarchy for assets and liabilities measured at fair value are presented in the following table.
GROUP $ MILLION
LEVEL 1 AS ATLEVEL 2 AS ATLEVEL 3 AS AT
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Measured at fair value on
a recurring basis:
Derivative assets
–Commodity derivatives21486107444–––
–Foreign exchange derivatives–––50853185–––
–Interest rate derivatives¹–––427387390–––
Derivative liabilities
–Commodity derivatives(17)(5)(2)(1)(3)––––
–Foreign exchange derivatives–––(809)(40)(102)–––
–Interest rate derivatives¹–––(235)(448)(339)–––
Emissions units held for trading371924––––––
Investment in Beingmate–40–––––––
Investments in shares211920171818221722
Measured at fair value on
a non-recurring basis:
Net (liabilities)/assets held for sale––––––(70)494(80)
Fair value255159149(547)771156(48)511(58)
1 Includes cross-currency interest rate swaps.
The fair value hierarchy for each class of financial asset and liability where the carrying amount differs from the fair value is presented in the following table.
GROUP $ MILLION
FAIR VALUE
CARRYING AMOUNT AS ATLEVEL 1 AS ATLEVEL 2 AS AT
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Financial assets
Long-term advances161163163–––172177182
Financial liabilities
Borrowings
–NZX-listed bonds(250)(600)(600)(253)(625)(611)–––
–Capital notes(35)(35)(35)(35)(33)(35)–––
–Medium-term notes(3,803)(4,445)(3,903)–––(3,919)(4,620)(4,056)
10 NET TANGIBLE ASSETS PER QUOTED EQUITY SECURITY
Net tangible assets is calculated as net assets less intangible assets.
GROUP
AS AT
31 JAN 2022
UNAUDITED
AS AT
31 JAN 2021
UNAUDITED
AS AT
31 JUL 2021
AUDITED
Net tangible assets per security
$ per equity instrument on issue2.723.072.87
Equity instruments on issue (million)1,6131,6131,613
6667
INTERIM FINANCIAL STATEMENTSFONTERRA INTERIM REPORT 2022

Non-GAAP MeasuresIndependent Review Report
Fonterra uses several non-GAAP measures when discussing financial performance. Non-GAAP measures are not defined or specified by NZ IFRS.
Management believes that these measures provide useful information as they provide valuable insight on the underlying performance of the business. They may
be used internally to evaluate the underlying performance of business units and to analyse trends. These measures are not uniformly defined or utilised by all
companies. Accordingly, these measures may not be comparable with similarly titled measures used by other companies. Non-GAAP financial measures should
not be viewed in isolation nor considered as a substitute for measures reported in accordance with NZ IFRS.
Non-GAAP measures are not subject to audit unless they are included in Fonterra’s audited annual financial statements.
Please refer to the following tables for reconciliations of NZ IFRS to non-GAAP measures, and the Glossary for definitions of non-GAAP measures referred
to by Fonterra.
Reconciliation profit after tax to total Group normalised EBITDA
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Profit after tax364391599
Net finance costs from continuing operations90138252
Net finance costs from discontinued operations13310
Tax expense from continuing operations140125103
Tax credit from discontinued operations––(5)
Depreciation and amortisation from continuing operations314320642
Depreciation and amortisation from discontinued operations–––
Total Group EBITDA 9219771,601
Gain on sale of Ying and Yutian China Farms––(32)
China Farms impairment reversal–(23)(23)
Gain on sale of Falcon China Farms JV––(40)
Income Statement impact of Beingmate investment–5049
Brazil consumer and foodservice business impairment––39
Total normalisation adjustments–27(7)
Total Group normalised EBITDA9211,0041,594
Reconciliation from profit after tax to total Group normalised EBIT
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Profit after tax364391599
Net finance costs from continuing operations90138252
Net finance costs from discontinued operations13310
Tax expense from continuing operations140125103
Tax credit from discontinued operations––(5)
Total Group EBIT607657959
Normalisation adjustments (as detailed above)–27(7)
Total Group normalised EBIT607684952
To the shareholders of Fonterra Co-operative Group Limited
REPORT ON THE INTERIM FINANCIAL STATEMENTS
Conclusion
We have completed a review of the accompanying interim financial statements which comprise:
–the statement of financial position as at 31 January 2022;
–the income statement, statements of other comprehensive income, changes in equity and cash flows for the six month period then ended; and
–notes, including a summary of significant accounting policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements on pages 48 to 67 do not:
–present fairly in all material respects the Group’s financial position as at 31 January 2022 and its financial performance and cash flows for the 6 month period
ended on that date; and
–comply with NZ IAS 34 Interim Financial Reporting (NZ IAS 34) and IAS 34 Interim Financial Reporting (IAS 34).
Basis for conclusion
A review of interim financial statements in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity
(“NZ SRE 2410”) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures.
As the auditor of Fonterra Co-operative Group Limited, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual
financial statements.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.
Use of this Independent Review Report
This report is made solely to the shareholders as a body. Our review work has been undertaken so that we might state to the shareholders those matters we
are required to state to them in the Independent Review Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the shareholders as a body for our review work, this report, or any of the opinions we have formed.
Responsibilities of the Directors for the interim financial statements
The Directors, on behalf of the Company, are responsible for:
–the preparation and fair presentation of the interim financial statements in accordance with NZ IAS 34 and IAS 34;
–implementing necessary internal control to enable the preparation of interim financial statements that are fairly presented and free from material
misstatement, whether due to fraud or error; and
–assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless they either intend to liquidate or to cease operations or have no realistic alternative but to do so.
Auditor’s Responsibilities for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review. We conducted our review in accordance with NZ SRE
2410. NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with NZ IAS 34 and IAS 34.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing
(New Zealand). Accordingly, we do not express an audit opinion on these interim financial statements.
This description forms part of our Independent Review Report.
KPMG
Auckland
16 March 2022
6869
FONTERRA INTERIM REPORT 2022

GlossaryNon-GAAP Measures (CONTINUED)
Reconciliation from profit after tax to normalised profit after tax and normalised earnings per share
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Profit after tax 364391599
Normalisation adjustments (as detailed on the previous page)–27(7)
Tax on normalisation adjustments––(4)
Normalised profit after tax364418588
Profit attributable to non-controlling interests(16)(19)(21)
Normalisation adjustments attributable to non-controlling interests––(17)
Normalised profit after tax attributable to equity holders of the Co-operative348399550
Weighted average number of Co-operative shares (thousands of shares)1,613,3581,612,8571,613,105
Normalised earnings per share ($)0.220.250.34
Reconciliation from gross profit to total Group normalised gross profit
GROUP $ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2022
UNAUDITED
31 JAN 2021
UNAUDITED
31 JUL 2021
AUDITED
Gross profit from continuing operations1,5491,6512,984
Gross profit from discontinued operations 5894153
China Farms impairment reversal–(23)(23)
Total Group normalised gross profit1,6071,7223,114
TERMSDEFINITIONS
Adjusted net debtis calculated as total borrowings, plus bank overdraft, less cash and cash equivalents, plus a cash adjustment for 25% of
cash and cash equivalents held by the Group’s subsidiaries, adjusted for derivatives used to manage changes in hedged
risks on debt instruments. Amounts relating to disposal groups held for sale are included in the calculation.
Aggregate minimum
shareholding requirement
means the total amount of shares required to be held by farmer shareholders to meet the Share Standard.
AMENArepresents the Ingredients, Foodservice and Consumer channels in Africa, Middle East, Europe, North Asia and Americas.
Asia Pacificrepresents the Ingredients, Foodservice and Consumer channels in New Zealand, Australia, Pacific Islands, South East Asia
and South Asia.
Attributable to equity holders
of the Co-operative
is used to indicate that a measure or sub-total excludes amounts attributable to non-controlling interests.
Average capital employedis a 13-month rolling average of capital employed.
Bulk liquidsmeans bulk raw milk that has not been processed and bulk separated cream.
Capital employedis adjusted net debt less the cash adjustment (used in calculating adjusted net debt), plus cash and cash equivalents held
by subsidiaries for working capital purposes, plus equity excluding hedge reserves and net deferred tax assets.
Capital expenditurecomprises purchases of property (less specific disposals where there is an obligation to repurchase), plant and equipment
and intangible assets (excluding purchases of emissions units), net purchases of livestock, and includes amounts relating to
disposal groups held for sale.
Capital investedcomprises capital expenditure plus right of use asset additions and business acquisitions, plus equity contributions and
long-term advances provided to, and investments in, entities that are not controlled.
Consumerrepresents the channel of branded consumer products, such as powders, yoghurts, milk, butter and cheese.
Continuing operationsmeans operations of the Group that are not discontinued operations.
Custodianmeans the Fonterra Farmer Custodian, which is the legal holder of the shares in respect of which economic rights are held
for the Fund.
Debt to EBITDAis adjusted net debt divided by Total Group normalised earnings before interest, tax, depreciation and amortisation
(Total Group normalised EBITDA) excluding share of profit/loss of equity accounted investees and net foreign exchange
gains/losses.
DIRAmeans the Dairy Industry Restructuring Act 2001, which authorised Fonterra’s formation and regulates its activities,
subsequent amendments to the Act, and the Dairy Industry Restructuring (Raw Milk) Regulations 2012.
Discontinued operationsmeans a component of the Group that is classified as held for sale (or has been sold) and represents, or is part of a single
co-ordinated plan to dispose of, a separate major line of business or geographical area of operations, or is a subsidiary
acquired exclusively with a view to resale.
Dividend yieldis dividends (per share) divided by volume weighted average share price for the period 1 August to 31 July.
Dry sharesmeans any shares held by a farmer shareholder in excess of the number of shares required to be held by that farmer
shareholder in accordance with the Share Standard for a season.
Earnings before interest
and tax (EBIT)
is profit before net finance costs and tax.
Earnings before interest, tax,
depreciation and amortisation
(EBITDA)
is profit before net finance costs, tax, depreciation and amortisation.
Earnings per share (EPS)is profit after tax attributable to equity holders of the Co-operative divided by the weighted average number of shares on
issue for the period.
EBIT marginis EBIT divided by revenue from sale of goods.
EBITDA marginis EBITDA divided by revenue from sale of goods.
Economic rightsmeans the rights to receive dividends and other economic benefits derived from a share, as well as other rights derived
from owning a share.
7071
FONTERRA INTERIM REPORT 2022

Glossary CONTINUED
TERMSDEFINITIONS
Farmgate Milk Pricemeans the average price paid by Fonterra for each kilogram of milk solids (kgMS) supplied by Fonterra’s farmer
shareholders under Fonterra’s standard terms of supply. The season refers to the 12-month milk season of 1 June to
31 May. The Farmgate Milk Price is set by the Board, based on the recommendation of the Milk Price Panel. In making
that recommendation, the Panel provides assurance to the Board that the Farmgate Milk Price has been calculated in
accordance with the Farmgate Milk Price Manual.
Fonterra's average
NZD/USD conversion rate
is the rate that Fonterra has converted net United States Dollar receipts into New Zealand Dollars including hedge cover
in place.
Foodservicerepresents the channel selling to businesses that cater for out-of-home consumption; restaurants, hotels, cafés, airports,
catering companies etc. The focus is on customers such as; bakeries, cafés, Italian restaurants, and global quick-service
restaurant chains. High performance dairy ingredients including whipping creams, mozzarella, cream cheese and butter
sheets, are sold in alongside our business solutions under the Anchor Food Professionals brand.
Free cash flowis the total of net cash flows from operating activities and net cash flows from investing activities.
Gearing ratio (adjusted net debt)is adjusted net debt divided by total capital. Total capital is equity excluding hedge reserves, plus adjusted net debt.
Global accountsmeans large scale, multi-national/multi-region customers.
Global Dairy Trade (GDT)means the electronic auction platform that is used to sell commodity dairy products.
Greater Chinarepresents the Ingredients, Foodservice and Consumer channels in Greater China, and the Falcon China Farms JV.
Gross marginis gross profit divided by revenue from sale of goods.
Group Operationscomprises functions under the Chief Operating Office (COO) including New Zealand milk collection and processing
operations and assets, supply chain, Group IT, Sustainability and Innovation; Fonterra Farm Source™ retail stores; and the
Central Portfolio Management function (CPM).
Held for salean asset or disposal group is classified as held for sale if it is available for immediate sale in its present condition and its
sale is highly probable. A disposal group is a group of assets and liabilities to be disposed of (by sale or otherwise) in a
single transaction.
Ingredientsrepresents the channel comprising 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.
kgMSmeans kilograms of milk solids, the measure of the amount of fat and protein in the milk supplied to Fonterra.
Net debtmeans adjusted net debt.
Net tangible assets per securityis net tangible assets divided by the number of equity instruments on issue. Net tangible assets is calculated as net assets
less intangible assets.
Non-reference productsmeans all dairy products, except for reference commodity products manufactured in NZ.
Non-shareholding farmmeans a farm where the owning entity is not entitled to hold shares in the Co-operative. As an example, farms supplying
MyMilk.
Normalisation adjustmentsmeans adjustments made for certain transactions that meet the requirements of the Group’s Normalisation Policy. These
transactions are typically unusual in size and nature. Normalisation adjustments are made to assist users in forming a view
of the underlying performance of the business. Normalisation adjustments are set out in the Non-GAAP Measures section.
Normalisedis used to indicate that a measure or sub-total has been adjusted for the impacts of normalisation adjustments. E.g.
‘Normalised EBIT’.
Product channelFonterra has three product channels, Ingredients, Foodservice and Consumer.
Profit after tax marginis profit after tax attributable to equity holders of the Co-operative, divided by revenue from sale of goods.
Reference commodity products
(also referred to as reference
products)
means the commodity products used to calculate the Farmgate Milk Price, comprising Whole Milk Powder,
Skim Milk Powder, Butter Milk Powder, Anhydrous Milk Fat and Butter.
Reportedis used to indicate a sub-total or total is reported in the Group’s Financial Statements before normalisation adjustments.
E.g. ‘Reported profit after tax’.
Retentionsmeans profit after tax attributable to equity holders of the Co-operative, divided by the number of Co-operative shares on
issue, less dividend per share. Retentions are reported as nil where Fonterra has reported a net loss after tax.
TERMSDEFINITIONS
Return on capitalis Total Group normalised EBIT including finance income on long-term advances less a notional tax charge, divided by
average capital employed.
SeasonNew Zealand: A period of 12 months from 1 June to 31 May.
Australia: A period of 12 months from 1 July to 30 June.
Chile: A period of 12 months from 1 August to 31 July.
Shareholding farmmeans a farm where the owning entity of the farm has a minimum required shareholding of at least 1,000 shares in the Co-
operative. This includes farms where the owning entity is in the process of sharing up on a Share Up Over Time contract.
Share Standardmeans the number of shares a farmer shareholder is required from time to time to hold as determined in accordance with
the Constitution, currently being one share for each kilogram of milksolids obtainable from milk supplied (excluding milk
supplied on contract supply) to Fonterra. For these purposes, milk supplied is based on a three season rolling average of a
farm’s production.
Total Groupis used to indicate that a measure or sub-total comprises continuing operations, discontinued operations and non-
controlling interests. E.g. ‘Total Group EBIT’.
Total pay-outmeans the total cash payment to a 100% share backed farmer shareholder, being the sum of the Farmgate Milk Price
(kgMS) for every milk solid supplied and the dividend for every share held.
Unallocated costs and
eliminations
represents corporate costs including Co-operative Affairs and Group Functions; and any other costs that are not directly
associated to the reporting segments; and eliminations of inter-segment transactions.
Vouchermeans a voucher provided to a farmer shareholder who transferred the economic rights of a wet share to the Fund, and
which can be used to count towards a farmer shareholder's Share Standard.
WACCmeans weighted average cost of capital.
Weighted average share pricerepresents the average price Fonterra Co-operative Group Limited shares traded at, weighted against the trading volume
at each price over the reporting period.
Wet sharesmeans any shares held by a farmer shareholder in accordance with the Share Standard for a season.
Working capitalis total trade and other receivables plus inventories, less trade and other payables. It excludes amounts owing to suppliers
and employee entitlements.
Working capital daysis average working capital divided by revenue from sale of goods, multiplied by the number of days in the period.
7273
FONTERRA INTERIM REPORT 2022

Directory
FONTERRA BOARD OF DIRECTORS
Peter McBride
Clinton Dines
Brent Goldsack
Leonie Guiney
Bruce Hassall
Holly Kramer
Andrew Macfarlane
John Nicholls
Cathy Quinn
Donna Smit
Scott St John
FONTERRA MANAGEMENT TEAM
Miles Hurrell
Marc Rivers
Judith Swales
Mike Cronin
Fraser Whineray
Kate Daly
Kelvin Wickham
Teh-han Chow
REGISTERED OFFICE
Fonterra Co-operative Group Limited
Private Bag 92032
Auckland 1142
New Zealand
109 Fanshawe Street
Auckland Central 1010
New Zealand
Phone +64 9 374 9000
Fax +64 9 374 9001
AUDITORS
KPMG
18 Viaduct Harbour Avenue
Auckland 1010
New Zealand
FARMER SHAREHOLDER AND SUPPLIER SERVICES
Freephone 0800 65 65 68
FONTERRA SHARES AND FSF UNITS REGISTRY
Computershare Investor Services Limited
Private Bag 92119
Auckland 1142 New Zealand
Level 2, 159 Hurstmere Road
Takapuna
Auckland 0622
New Zealand
CAPITAL NOTES REGISTRY
Link Market Services Limited
PO Box 91976
Auckland 1142
New Zealand
Level 30, PwC Tower
15 Customs Street West
Auckland Central 1010
New Zealand
INVESTOR RELATIONS ENQUIRIES
Phone +64 9 374 9000
investor.relations@fonterra.com
www.fonterra.com
74
FONTERRA INTERIM REPORT 2022
insight
creative.co.nz
FONTERRA092

fonterra.com

---

17 March 2022

2
•Performing well, and creating the momentum needed to
achieve our 2030 targets
•Record forecast milk price reflects strong demand at a time of
constrained global supply
•Inflationary pressures both on-farm and in our operations
•COVID-19 remains a challenge, but we continue to deliver for
our shareholders and customers
•Solid first half earnings and confirm full year forecast
earnings range
¹
²
³
1.Total Group figures are for the six months ended 31 January 2022. This includes continuing and
discontinued operations, and includes amounts attributable to non-controlling interests
2.Relative to reported profit after tax in the first six months of FY21
3.Attributable to equity holders of the Co-operative, excludes amounts attributable to non-controlling interests

Non-reference product shipment price¹ ³
Reference product shipment price¹ ²
,
Reference product shipment price¹ ² 2020/2021 Season
Reference product shipment price¹ ² 2021/2022 Season
H1
FY21
3
31 May 2030 Nov 2031 May 21
Monthly price of reference
products on GDT
3,000
4,000
31 Jul 2031 Jan 2131 Jul 21
Reference and non-reference
price relativities on GDT
(US$/MT)
3,000
4,000
31 Jan 22
2021/2022
Season
2020/2021
Season
H1
FY22
31 Jan 22
•Operating with significant increase in dairy prices due
to strong demand and constrained supply
•Average GDT WMP shipment prices in H1 were 28%
higher than H1 prior year COVID-19]
•Price relativities improved in Q2 relative to Q1
•Price relativities up from prior year’s Q4, but less
favourable than H1 last yearCOVID-19]
(US$/MT)
H2
FY21
,
,
,
Source: GlobalDairyTrade
1.The shipment price is a weighted average price of GDT contracts struck 1 to 5 months prior to the agreed shipment
month. Shipment month is the month in which the sale would be deemed for financial reporting purposes to have
been completed, and will normally be the month in which the sale is invoiced and the product is shipped
2.Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and Butter prices
achieved on GDT
3.Non-reference product shipment price is represented by the cheddar prices achieved on GDT

have partially
offset rising collection costs,
due to our on-farm milk vat
monitoring systems
Enhanced milk utilisation and plant
uptime has been supported by
despite the disruption of site and shift
bubbles to manage COVID-19
With only 38% of ships arriving on
time in New Zealand, we are
through
collaboration of our supply chain
teams, including Kotahi
4

and good management
and planning, our
end-to-end supply chain
has continued to operate
and we are getting
products to our customers
nutritious breakfasts are
served to kiwi kids through
our KickStartbreakfast
partnership with the
Government and
Sanitarium
of dairy donated to families
in need across Aotearoa
since 2020 through our
partnership with New
Zealand Food Network
to build stronger
connections between
Fonterra farmers and
employees
5

²
³
¹
Note: Total Group figures for the six months ended 31 January 2022. This includes continuing
and discontinued operations
1.Reported basis. Includesamounts attributable to non-controlling interests
2.Normalised basis. Attributable to equity holders of the Co-operative, excludes amounts attributable to non-controlling
interests
3.Adjusted net debt. Refer to Glossary for definition
6

1.Total Group figures for the six months ended 31 January. This includes continuing and discontinued
operationsand are on a normalised basis unless otherwise stated
2.2021 performance includes Ying and YutianChina Farming hubs and China Farms joint venture,
which were subsequently sold
3.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table
due to rounding of figures
4.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity
accounted investees
5.Attributable to equity holders of the Co-operative, excludes amounts attributable to non-controlling interests
•Increased revenue from higher product prices, but partially offset
by lower sales volume, mainly due to lower milk production
•Gross margin decreased due to significant increase in cost of
goods sold, reflecting higher cost of milk
•Gross profit and normalisedEBIT reflects a diversified portfolio:
oImproved margins in our Ingredients channel, particularly
in the protein portfolio
oPressure in Consumer in some markets, significantly
tighter margins in Foodservice across all regions
•Normalisedprofit after tax is down $54 million, due to lower
earnings partially offset by favourableinterest expense
million¹
²
∆
³
Sales volume (‘000 MT)
Revenue ($)
Cost of goods sold ($)
Gross profit ($)
Gross margin (%)
Operating expenses ($)
Other
⁴
($)
Normalised EBIT($)
Normalised profit after
tax ($)
Normalised EPS
⁵
(cents)
7

8
¹
¹²
Q1Q2Q3Q4Q1Q2
Note: Figures are for the six months ended 31 January 2022
1.Prepared on a normalised continuing operations basis. Normalised EBIT contributions sum to $644 million, and does not align to reported continuing operations due to excluding unallocated costs and eliminations
2.Inclusive of Group Operations’ EBIT attribution. Comparative information includes re-presentations for consistency with the current period
¹²

¹
Note: Figures are for the six months ended 31 Januaryand prepared on a normalised continuing operations basis. Comparative information includes re-presentations for consistency with the current period
1. Eliminations and unallocated costs
9

10
•Reduced net debt and leverage mainly due to
retained earnings and cash proceeds from
divestments in FY21
•Net debtand gearing are higher at half year
compared to full year due to seasonal profile of
working capital
•Working capital days up reflecting the higher value of
inventory held due to milk price, up by almost
30% on last year
•Operating expenditure tracking in line with last year
7.5
7.6
6.4
6.1
20182019202020212022
Net Debt ($ billion)
80
81
82
90
20182019202020212022
Working Capital Days
1,263
1,232
1,092
1,055
20182019202020212022
Opex ($ million)
³
48.2
47.3
44.2
38.5
202020212022
Half YearFull Year
Note: Figures are for the six months ended 31 January except where otherwise stated
1.Refer to Glossary for definition
2.As at 31 January
3.On a Total Group and normalised basis

per kgMS
2020/2021
Season
2019/2020
Season
2021/2022
Season
Forecast
31 May 1931 May 2031 May 21
(US$/MT)
Farmgate Milk Price for the season
Source: GlobalDairyTrade
1.The shipment price is a weighted average price of GDT contracts struck 1 to 5 months prior to the agreed shipment month. Shipment month is the month in which the sale would be deemed for financial reporting purposes to have been
completed, and will normally be the month in which the sale is invoiced and the product is shipped
2.Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and Butter prices achieved on GDT
•Reflects higher commodity prices at a time of strong
demand and constrained global supply
•Risks include commodity price volatility, and disruption
of global markets and supply chain due to COVID-19
and geopolitical events
3,000
4,000
31 Jan 22
,
Reference product shipment price¹ ²
11