Fonterra provides Milk Price and performance update

26 May 2022

Fonterra provides Milk Price and performance update

Fonterra today announced its 2022/23 opening forecast Farmgate Milk Price and provided an update on
its third-quarter performance.

The opening forecast Farmgate Milk Price for the 2022/23 season is set at $8.25 - $9.75 per kgMS, with a
midpoint of $9.00 per kgMS.

CEO Miles Hurrell says the strong opening forecast reflects continued demand for dairy coupled with
constrained global supply.

“The long-term outlook for dairy remains positive, despite recent geopolitical and COVID-19 related
events impacting global demand in the short-term.

“On the supply side, growth from key milk producing regions is expected to remain constrained as high
feed, fertiliser and energy costs continue to impact production volumes.

“These demand and supply dynamics are expected to support dairy prices in the medium to long-term.

“However, we are operating in an increasingly volatile global environment and are managing a wider
range of risks than usual.

“This includes the potential for further impacts from COVID-19, financial markets and foreign exchange
volatility, global inflationary pressures, a tightening labour market, increasing interest rates, geopolitical
events, as well as the possible impact on demand from higher dairy prices.

“This is why our 2022/23 forecast range is so wide at this point in the season.”

For the 2021/22 season, Fonterra has maintained its 2021/22 forecast Farmgate Milk Price of $9.10 -
$9.50 per kgMS.

“At a midpoint of $9.30 per kgMS, this would be the highest forecast milk price in the Co-op’s history and
would see us contribute almost $14 billion into the New Zealand economy through milk price payments.”

Business performance

For the nine months ending 30 April 2022, Fonterra’s sales volumes were down as a result of lower milk
collections and the timing of sales due to short-term impacts on demand including the lockdowns in China,
the economic crisis in Sri Lanka and the Russia-Ukraine conflict.

Fonterra Co-operative Group
Page 2

Total Group normalised EBIT was $825 million, down $134 million reflecting lower sales volumes,
continued pressure on margins from the significantly higher milk price, on-going COVID-19 disruptions,
and the rapid decline of the Sri Lankan Rupee.

This was also reflected in Fonterra’s Normalised Profit After Tax of $472 million, down $115 million and
reported Profit After Tax of $472 million, down $131 million.

Commenting on Fonterra’s performance, Mr Hurrell says despite significant market disruption, the Co-op
continued to deliver a strong milk price and solid earnings.

“As an exporter, many of the markets we operate in have been prone to sudden shocks, which can impact
what we sell, where we sell it and when, but right now we’re feeling the impact of multiple events across
multiple markets.

“We are actively managing the challenges arising from COVID-19 and other geopolitical and
macroeconomic events. However, increasing market volatility and uncertainty, on-going supply chain
disruptions and growing inflationary pressures have added increased complexity.

“I want to thank our employees for delivering a solid financial performance despite the challenging global
conditions, and also our farmer owners, sharemilkers and contract milkers who are managing increasing
costs on-farm.

“AMENA continued to deliver a strong performance. Normalised EBIT was $406 million, up 30% due to
improved gross margins in our Ingredients channel, and a strong performance from our Chilean business.

“In Greater China, Ingredients continued to benefit from increased sales of higher margin products.
However, normalised EBIT was down 17% to $317 million, due to continued pressure on our margins
from the higher milk price, particularly in Foodservice, as well as the COVID-19 lockdowns. We also
expect the impact of the lockdowns to show up in our fourth quarter results.

“Aside from some supermarkets, all restaurants and other food outlets were closed in Shanghai in early
April to contain the Omicron outbreak. While restrictions have started to ease, a number of food outlets
remain closed, while other cities across China are facing COVID-19 restrictions. The impacts of this, and
the disruptions to supply chains, have been felt across the market and is reflected in our Greater China
sales volumes which are down on the same time last year.

“APAC’s normalised EBIT was down 43% to $177 million. While our Australian business and Ingredients
channel continued to perform well, this was more than offset by the unprecedented economic challenges
in Sri Lanka, margin pressure from the higher milk price and other COVID-19 related challenges.

“While historically a good business for us, the significant deterioration of economic conditions in Sri Lanka
has seen the rapid devaluation of the Sri Lankan Rupee against the US dollar.

“This means it takes more Sri Lankan Rupee to pay for product purchased from New Zealand, which is
sold in US dollars, and has resulted in an $81 million adverse revaluation of our Sri Lankan business
payables owing to New Zealand. This has been reflected in our normalised EBIT, which may continue to
vary as Sri Lanka’s currency fluctuates.”

Mr Hurrell says the Co-op’s focus on financial discipline has put it in a good position to manage the
impacts of these recent events.

“With over 95% of our milk contracted for the season, our strong balance sheet gives us the ability to hold
higher inventory to manage the short-term impacts on demand and our sales profile.

“When combined with the increased value of our inventory, which is up due to the higher milk price, this
has meant our working capital, and therefore debt, is higher than usual at this point in the season. We
expect this to balance out over the course of the year.

Fonterra Co-operative Group
Page 3

“Total Group operating expenses have increased, up 3% to $1,632 million mainly due to inflationary
pressures and COVID-19 supply chain disruptions which have resulted in higher distribution and storage
costs.”

Commenting on the rest of the year, Mr Hurrell says the Co-op is maintaining its forecast earnings
guidance of 25-35 cents per share.

“While favourable price relativities in the fourth quarter are positive for earnings, we expect continued
pressure on our margins due to the higher milk price coupled with the normal seasonal profile of our
business.”

Progress on strategy

Mr Hurrell says, despite facing additional challenges in the third quarter, the Co-op has continued to take
steps towards its long-term strategy.

“Following the Government’s announcement that it would make the necessary legislative amendments to
support our new Flexible Shareholding capital structure, the government consultation process is
underway, and we expect the amendments to progress through Parliament this year.

“The Government’s aspirations for our industry are well aligned to the Co-op’s. We all want a high
performing dairy industry, and a successful and innovative Fonterra is central to that.

“Fonterra and the Fonterra Co-operative Council are both making a submission to ensure the voice of the
Co-op and its farmers are heard.

“We are continuing our ownership review of our Australian business and the divestment process for our
Chilean business, Soprole, is underway. We’re taking our time to ensure the best outcomes for both
businesses and remain confident on delivering on our intention to return around $1 billion of capital to our
shareholders and unit holders by FY24.

“As part of our plan to grow our earnings by developing new innovative products and commercialising our
IP, we launched Nurture in Singapore – a cultured milk beverage fortified with added vitamins and our
probiotics, targeting the gut health market.

“We’ve also developed our thinking on the role our dairy expertise can play in addressing cognitive health
for all ages. Consumers are becoming increasingly aware of the importance of mental health, and we
have plans to launch new consumer products for improving cognition, sight and stress over the coming
months.

“In sustainability, we have signaled our aspiration to be Net Zero by 2050, and we support the
Government’s recently announced plan to reduce on-farm emissions through the new Centre for Climate
Action on Agricultural Emissions.

“We believe methane is New Zealand’s greatest climate change challenge and finding a solution will be a
game-changer. That’s why we recently announced we’re expanding the trial of methane-reducing
seaweed as a supplementary feed for cows.

“Lab trials have shown the seaweed has significant potential to reduce emissions and, if on-farm trials are
a success, our partnership with Sea Forest means our farmers will be at the front of the queue. This is just
one of a number of initiatives we have underway in this area.

“We have also announced the trial of an electric milk tanker – the first of its kind in New Zealand.”


ENDS

Fonterra Co-operative Group
Page 4

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.

For further information contact:

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

---

26 May 2022

2
•Macroeconomic and geopolitical events impacting supply chains,
market volatility and putting pressure on global economic growth
•Long-term outlook for dairy remains positive, announced strong
opening 2022/23 forecast Farmgate Milk Price range
•Continuing to deliver record milk price for the current season, but
short-term impacts on demand
•Diversified and resilient earnings, given ongoing margin pressure
from higher milk price, ongoing COVID-19 disruptions and Sri
Lanka’s economic crisis
•Maintaining forecast earnings range. Incorporates Q4 seasonal
profile and ongoing margin pressure
¹
¹
²
1.Unaudited reported Total Group figures are for the ninemonths ended 30 April 2022. This includes
continuing and discontinued operations, and includes amounts attributable to non-controlling interests
2.Attributable to equity holders of the Co-operative and excludes amounts attributable to
non-controlling interests

201220142016201820202022
GDT Price Index
3
GDT Price Index
3,000
4,000
31 Jul 2031 Jan 2131 Jul 21
Reference and non-reference
price relativities on GDT
(US$/MT)
31 Jan 22
•During FY22 Q3, GDT Price Index reached highest
levels since trading on the platform began
•Prices weakened near the end of Q3 due to a number
ofevents impacting global demand
•Price relativities improved in Q3, relative to FY22 H1
•Price relativities year-to-date are less favourablethan
last year]
,
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
30 Apr 22
1,000
1,500
,
H1
FY21
H1
FY22
Q3
FY21
Q4
FY21
Q3
FY22
5,000
Reference product shipment price¹ ²
Non-reference product shipment price¹ ³

4
•Recent COVID-19 lockdowns in China reduced
demand late in Q3 and disrupted supply chains
•Expect reduced demand to continue into Q4
•Russia-Ukraine conflict has increased disruption of
supply chains, grain and oil prices, adding to global
market volatility and increased uncertainty
•COVID-19 contributed to the rapid deterioration in
economic conditions and devaluation of the rupee
•Revaluation of Sri Lankan business payables for
inventory has adversely impacted our earnings

1.Total Group figures are unaudited and for the ninemonths ended 30 April. 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 sold during FY21
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-operativeand excludes amounts attributable to non-controlling interests
•Increased revenue from higher product prices, partially offset by
lower sales volumes reflecting lower milk production and timing
of sales due to short-term impacts on demand
•Solid gross profit given significant increase in costs of goods
sold. Strong Ingredients gross margin, offset by higher milk
price continuing to impact Foodservice and Consumer margins
•Increased operating expenses, mainly due to inflationary
pressures and COVID-19 supply chain disruption
•‘Other’ includes $(81) million adverse revaluation of the Sri
Lankan business payables due to devaluation of the rupee
•Normalisedprofit after tax is down $115 million, due to lower
earnings, partially offset by lower interest expense
million¹
²
∆
³
Sales volume (‘000 MT)
Revenue ($)
Cost of goods sold ($)
Gross profit ($)
Gross margin (%)
Operating expenses ($)
Other
⁴
($)
Normalised EBIT($)
Normalised profit after
tax ($)
Normalised EPS
⁵
(cents)
5

6
¹
¹²
³
Q1Q2Q3Q4Q1Q2Q3
Note: Figures are unaudited for the nine months ended 30 April 2022
1.Prepared on a normalised continuing operations basis. Normalised EBIT contributions sum to $900 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
3.Includes $(81) million adverse revaluation of payables in Sri Lanka
¹²

¹
²
Note: Figures are unaudited and for the nine months ended 30 April and prepared on a normalised continuing operations basis. Comparative information includes re-presentations for consistency with the current period
1.Eliminations and unallocated costs
2.Includes $(81) million adverse revaluation of payables in Sri Lanka
7

Government consultation
underway, with
amendments to progress
through Parliament
this year
The first of its kind in NZ &
part of our aspiration to be
Net Zero by 2050
Successfully completed
trials of wood pellets at
Hautapu& wood biomass
at Edendale
A low sugar cultured milk
drink, with added vitamins
and probiotics, targeting
the gut health market
8

per kgMS
2020/2021
Season
2019/2020
Season
2021/2022
Season
Forecast
31 May 1931 May 2031 May 21
(US$/MT)
Average reference product shipment price for the season
Source: GlobalDairyTrade. Data is up to GDT event 308 on 17 May 2022
1.Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and butter prices
2.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
3.The contracted shipment price is the weighted average shipment price of GDT contracts won 1 to 5 months prior on
the GDT platform. These contracts are yet to be shipped or invoiced and the weighted average price will change
closer to the actual shipment date as new contracts are written
•Strong demand for dairy and over 95% of milk
contracted for the season
•Recent events have impacted global demand for
dairy products in the short-term, in particular:
oChina COVID-19 lockdowns
oSri Lanka’s economic crisis
oRussia-Ukraine conflict
3,000
4,000
31 July22
,
9
,
5,000
Reference product shipment price¹ ²
Reference contract product shipment price¹ ³

5,000
per share
Source: GlobalDairyTrade. Data is up to GDT event 308 on 17 May 2022
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.The contracted shipment price is the weighted average shipment price of GDT contracts won 1 to 5 months prior on
the GDT platform. These contracts are yet to be shipped or invoiced and the weighted average price will change
closer to the actual shipment date as new contracts are written
3.Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and butter prices
achieved on GDT
4.Non-reference product shipment price is represented by the cheddar prices achieved on GDT
3,000
4,000
FY21
H1
FY22
H2
31 Jan 2131 Jul 21
•Maintained forecast earnings range:
oFavourableprice relativities in Q4 contributing to
earnings, in particular fromour protein portfolio
such as casein
oIncorporates Q4 seasonal profile and ongoing
margin pressure
•Risk of further volatility from Sri Lankan
economic situation and supply chain disruptions
31 Jul 20
(US$/MT)
31 Jan 2231 July 22
,
,
,
,
FY22
H1
FY21
H2
10
Reference product shipment price¹ ³
Non-reference product shipment price¹ ⁴
Reference product contract shipment price² ³
Non-reference product contract shipment price² ⁴

per kgMS
•Midpoint of $9.00 per kgMSreflects:
ocontinued demand for dairy, despite events
impacting global demand in the short-term
oconstrained supply as growth from key milk
producing regions is expected to remain low
•The wide range reflects several risks, such as further
impacts from:
oCOVID-19
omacroeconomic factors including global inflation,
increasing interest rates, and volatility in financial
and foreign exchange markets
ogeopolitical events such as the Russia-Ukraine
conflict and Sri Lanka’s economic crisis
11

12

574
514
815
959
825
20182019202020212022
EBIT ($ million)
2,316
2,229
2,472
2,499
2,435
20182019202020212022
Gross Profit ($ million)
(62)
378
1,057
975
825
20182019202020212022
EBIT ($ million)
Note: Total Group figures are unaudited and for the nine months ended 30 April. This includes continuing and discontinued operations and are on a normalisedbasis unless otherwise stated
14.8
14.9
16.0
15.5
17.0
20182019202020212022
Revenue ($ billion)
3,023
3,169
3,087
3,053
2,946
20182019202020212022
Sales Volume ('000 MT)
1,886
1,813
1,665
1,590
1,632
20182019202020212022
Opex ($ million)
13

0
10
20
30
40
50
60
70
80
90
JunJulAugSepOctNovDecJanFebMarAprMay
SeasonTotal Milk Solids
(kgMS)
Peak Day
Milk
2019/201,517m (down 0.4%)83m litres
2020/211,539m (up 1.5%)
83m litres
2021/221,480m (down 3.8%)¹
80m litres
Volume (m litres/day)
1. Current full season forecast
•Fonterra’s NZ milk collection season-to-date
(June –April) is 1,408 million kgMS, 3.8%
behind last season
•Cold and wet spring with lower sunshine
affected collections early in the season
•Improved North Islandcollections late in the
season due to favourable growing conditions,
offset by drier conditions in lower South Island
•Full season forecast remains at 1,480 million
kgMS, down 3.8% on last season
14

¹
Note: Figures are unaudited and for the nine months ended 30 April
1.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees accounted investees
15

$ millions20212022
•Increased gross margin due to:
oStrong demand in our protein
portfolio for caseinate, WPC
oHigher product prices in our
Australia business
•Gross margin down due to in-market
sales pricing not increasing at the
same rate as rising dairy prices
•Q3 gross margin remained in line with
half year
•Improved gross margins in Chile and
Australia businesses offset by higher
input costs in other markets
•EBIT impacted by $(81) adverse
million revaluation of our Sri Lankan
business payables
Gross profitEBIT
Gross profitEBITGross profitEBIT
Note:Figures are unaudited and for the nine months ended 30 April. Does not add to Total Group as shown on a normalisedcontinuing operations basis and excludes unallocated costs and eliminations. Comparative information includes
re-presentations for consistency with the current period
16

•Reference products sales volumes down due to
lower milk production and short-term impacts
on demand
•The average reference product sales price per metric
tonne has increased 24%, with all reference products
contributing to the increase
•The average non-reference product sales price per
metric tonne has increased 17%:
oPrices across the non-reference portfolio have
increased significantly, particularly casein
and WPC
oCheese prices have increased, but at a lower rate
than other products
•Cost of milk increased 27% and 24% for reference
products and non-reference products, respectively
Note: Figures are unaudited and for the nine months ended 30 April.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 692 million kgMSin reference products and 321 million kgMSnon-reference products (previous comparative period 758 million kgMSreference products and 331 million
non-reference products)
1. Excludes bulk liquid milk. Bulk liquid milk for the nine months ended 30 April 2022 was 51,000 MT of kgMSequivalent (the nine months ended30 April 2021 was 55,000 MT of kgMSequivalent)
¹
¹
17

Note: Figures are unaudited and for the nine months ended 30 April. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations.
Comparative information includes re-presentations for consistency with the current period
$ million20212022
Gross profitEBIT
Gross profitEBITGross profitEBIT
18

∆
¹
²
³
⁴
Includes EBIT attribution
from Group Operations⁵ ($)
224291%
Q1Q2Q3Q4
20212022
Note: Figures are unaudited and for the nine months ended 30 April. Figures are on a normalised continuing operations basis.
Comparative information includes re-presentations for consistency with the current period
1.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of figures
2.Includes sales to other segments
3.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity
accounted investees
4.This includes EBIT attribution from Group Operations
5.This is included in Asia Pacific’s EBIT. Refer to Glossary for explanation of Group Operations
•Improved Ingredients gross profit more than offset by a decline
in Foodservice and Consumer gross profit:
oContinued strong Ingredients gross margin driven by our
Australian business achieving higher product prices
oLower gross margins in Foodservice and Consumer due
to higher cost of milk and COVID-19 impacts
•‘Other’ down due to $(81) million adverse revaluation of our Sri
Lankan business payables
•Increased EBIT attribution from Group Operations due to
improved margins, particularly in our powder portfolio
19

$ million
Note: Figures are unaudited and for the nine months ended 30 April. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. Comparative information includes
re-presentations for consistency with the current period
20212022
Gross profitEBIT
Gross profitEBIT
Gross profitEBIT
20

∆
¹
²
³
⁴
Includes EBIT attribution
from Group Operations⁵ ($)
(13)57-
Q1Q2Q3Q4
20212022
Note: Figures are unaudited and for the nine months ended 30 April. Figures are on a normalised continuing operations basis.
Comparative information includes re-presentations for consistency with the current period
1.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of figures
2.Includes sales to other segments
3.Consists of other operating income, net foreign exchange gains/(losses) and share profit or loss on of equity
accounted investees
4.This includes EBIT attribution from Group Operations
5.This is included in AMENA’s EBIT. Refer to Glossary for explanation of Group Operations
•Strong increase in gross profit due to:
oImproved pricing and product mix in the Ingredients
channel, particularly caseinate and WPC in the
protein portfolio
oContinued volume and gross margin growth in our Chilean
consumer business
•Increased operating expenses due to rising supply chain costs
and supporting the increased sales volumes in Chile
•Increased EBIT attribution from Group Operations due to higher
margins, particularly in the protein portfolio
21

$ million
Note: Figures are unaudited and for the nine months ended 30 April. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. Comparative information includes
re-presentations for consistency with the current period
20212022
Gross profitEBITGross profitEBIT
Gross profitEBIT
22

∆
¹
²
³
⁴
Includes EBIT attribution
from Group Operations⁵ ($)
-6-
Q1Q2Q3Q4
20212022
Note: Figures are unaudited and for the nine months ended 30 April. Figures are on a normalised continuing operations basis.
Comparative information includes re-presentations for consistency with the current period
1.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to
rounding of figures
2.Includes sales to other segments
3.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted
investees
4.This includes EBIT attribution from Group Operations
5.This is included in Greater China’s EBIT. Refer to Glossary for explanation of Group Operations
•Sales volumes down due to lower volumes of GDT products
purchased and impact of COVID-19 lockdowns
•Improved Ingredients channel performance offset by a decline
in the Foodservice channel:
oIngredients channel improved due to higher prices and
increased sales volumes of higher margin products,
particularly caseinate products
oFoodservice channel impacted by higher cost of milk
reducing gross margins and COVID-19 lockdowns
•Increasedoperating expenses mainly due to COVID-19 supply
chain challenges
23

$ million
Note: Figures are unaudited and for the nine months ended 30 April. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. Comparative information includes
re-presentations for consistency with the current period
20212022
Gross profitEBITGross profitEBIT
Gross profitEBIT
24

•Strong balance sheet enables us to hold higher
inventory to manage sales profile following ongoing
COVID-19 disruptions
•Working capital days have increased due to:
oUnfavourable inventory days due to higher milk
price and higher average inventory levels
oFavourable receivables more than offset by
unfavourable payables
•As at30 April, our inventory position is higher than same
time last year:
oSignificantly higher dairy prices has increased the
value of inventory by $0.9 billion
oAn additional 77,000 MT of inventory on hand has
contributed to a $0.5 billion increase in inventory
1,106
(‘000 MT)
1,183
(‘000 MT)
25

26
•established as a joint
venture in 1987
•100% shareholding
since 2000
packagingplants at
our Biyagamasite
•1 powder plant
•1 liquid & culture products plant
employees
Anchor
Ratthi
Anlene
Newdale

1.9 m
0.5 m
0.2 m
2019USD 3.6 billion
2020USD 0.6 billion
2021Not stated
The Sri Lankan Rupee was unpegged and has limited
capacity to be hedged. It has devalued against the USD
so the amount of rupee required to meet USD
purchases has increased
Apr-22May-22
The Sri Lankan tourism industry, a significant contributor to the
economy, has been impacted by COVID-19, political turmoil
and now the economic crisis
Source: Sri Lanka Tourism Development Authority
5.7%
7.6%
9.9%
12.1%
14.2%
15.1%
18.7%
29.8%
Sep-21Oct-21Nov-21Dec-21Jan-22Feb-22Mar-22Apr-22
Source: Central Bank of Sri Lanka, year-on-year percentage change
Mar-22Feb-22
Source: Bloomberg
27

FY21FY22 Q3 YTDFY22 FY Target
Total recordable injury frequency rate (TRIFR) per million work hours¹5.76.85.6
Female representation in senior leadership²32.4%35.0%35.8%
Employee engagement4.09–³Top Quartile³
Farmer sentiment (Net Promoter Score for Fonterra in New Zealand)233530
Number of farms with Farm Environment Plans (New Zealand)53%66%67%
Reduction in water used at sites in water-constrained regions versus FY18(2.6)%(7.6)%⁴(8.0)%
Reduction in greenhouse gas emissions from manufacturing versus FY18(6.5)%(9.5)%⁴(6.5)%
Fonterra % kgMSof New Zealand milk collected for the season ended 31May79.0%
79.4%⁵
79.3%
New Zealand Farmgate Milk Price (per kgMS)$7.54$9.10-$9.50⁶$7.25-$8.75
Return on capital6.6%
Behind⁷
6.5% to 7.0%
Debt/EBITDA2.7x
Behind⁷
2.4x
Adjusted Net Debt Gearing Ratio38.5%
Behind⁷
34.5%
Normalised earnings per share34c
On track⁷
25c to 40c
1.Part of zero harm philosophy which also includes target 0 serious harm/0 fatalities
2.Senior leadership defined as Band 14+
3.Under ongoing management review of the provider and means of determining engagement, measurement of this
metric may not be completed during the FY22 financial year.
4.Calculated using a combination of actual data and estimates. FY22 GHG target flat reflecting improved efficiencies
offset by increased volumes.
5.Season to 31 March 2022. Prior comparable season to 31 March2021: 79.3%.
6.Latest publicly announced Forecast Farmgate Milk Price (9 May 2022).
7.FY22 Q3 reflects a full year forecast basis.
In accordance with the Constitution of Fonterra, the Board Statement of Intentions sets out the
Board’s intentions for the performance and operations of Fonterra. The table below provides an
update as of 30 April 2022, of Fonterra’s performance against these targets.
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Represents the Ingredients, Foodservice and Consumer channels in New Zealand,
Australia, Pacific Islands, South East Asia and South Asia
Represents the Ingredients, Foodservice and Consumer channels in Africa, Middle
East, Europe, North Asia and Americas
Capital expenditure comprises 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
Represents the channel of branded consumer products, such as powders, yoghurts,
milk, butter, and cheese
Is 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
Is profit before net finance costs and tax
Means 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
Represents the channel selling to businesses that cater for out-of-home
consumption; restaurants, hotels, cafes, airports, catering companies etc. The
focus is on customers such as; bakeries, cafes, 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
Represents the Ingredients, Foodservice and Consumer channels in Greater
China, and the Falcon China Farms JV
Comprises 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)
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Is Total Group normalised EBIT including finance income on long-term
advances less a notional tax charge, divided by average capital employed
New 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
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
Represents 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
Means kilograms of milk solids, the measure of the amount of fat and
protein in the milk supplied to Fonterra
Means all dairy products, except for reference commodity products manufactured
in NZ. Includes Whey Protein Concentrate (WPC)
Normalised earnings per share is calculated as normalised profit after tax
attributed to equity holders of the Co-operative divided by the weighted average
number of shares on issue for the period
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
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Thispresentationmaycontainforward-lookingstatementsandprojections.Therecanbenocertaintyofoutcomein
relationtothematterstowhichtheforward-lookingstatementsandprojectionsrelate.Theseforward-looking
statementsandprojectionsinvolveknownandunknownrisks,uncertainties,assumptionsandotherimportantfactors
thatcouldcausetheactualoutcomestobemateriallydifferentfromtheeventsorresultsexpressedorimpliedbysuch
statementsandprojections.Thoserisks,uncertainties,assumptionsandotherimportantfactorsarenotallwithinthe
controlofFonterraCo-operativeGroupLimited(Fonterra)anditssubsidiaries(theFonterraGroup)andcannotbe
predictedbytheFonterraGroup.
Whileallreasonablecarehasbeentakeninthepreparationofthispresentation,noneofFonterraoranyofits
respectivesubsidiaries,affiliatesandassociatedcompanies(oranyoftheirrespectiveofficers,employeesoragents)
(RelevantPersons)makesanyrepresentation,assuranceorguaranteeastotheaccuracyorcompletenessofany
informationinthispresentationorlikelihoodoffulfilmentofanyforward-lookingstatementorprojectionorany
outcomesexpressedorimpliedinanyforward-lookingstatementorprojection.Theforward-lookingstatementsand
projectionsinthisreportreflectviewsheldonlyatthedateofthispresentation.
Statementsaboutpastperformancearenotnecessarilyindicativeoffutureperformance.
ExceptasrequiredbyapplicablelaworanyapplicableListingRules,theRelevantPersonsdisclaimanyobligationor
undertakingtoupdateanyinformationinthispresentation.
Thispresentationdoesnotconstituteinvestmentadvice,oraninducement,recommendationoroffertobuyorsellany
securitiesinFonterraortheFonterraShareholders’Fund.
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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.
Definitions of non-GAAP measures used by Fonterra can be found in the Glossary.
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