Fonterra lifts forecast FY24 earnings and Milk Price

7 December 2023

Fonterra lifts forecast FY24 earnings and Farmgate Milk Price after strong Q1

Fonterra Co-operative Group Ltd today increased its forecast Farmgate Milk Price and earnings guidance
for FY24 following a strong start to the year.

The forecast Farmgate Milk Price midpoint for the 2023/24 season is up 25 cents to $7.50 per kgMS, with
the forecast range moving from $6.50-$8.00 per kgMS to $7.00-$8.00 per kgMS.

Fonterra CEO Miles Hurrell says the revised forecast reflects recent strengthening in demand for
reference commodity products from key importing regions, including improvement in demand from China
during the first quarter.

“Global Dairy Trade prices have lifted, and our sales book is also well contracted for this time of year,
giving us confidence to increase our forecast Farmgate Milk Price.

“It’s still early in the year, with potential for further volatility in commodity prices, so we will continue to
watch market dynamics closely and provide updates as needed,” says Mr Hurrell.

The Co-op also reported strong earnings for the first quarter due to improved performance in all three of
its sales channels.

“As a result, we have lifted the midpoint of our forecast earnings for the year up 5 cents per share, with
the range moving from 45-60 cents per share to 50-65 cents per share,” says Mr Hurrell.

Business performance

Fonterra's profit after tax is up 85% on this time last year to $392 million, equivalent to 24 cents per share.
EBIT is up 63% to $575 million.

These earnings are from continuing operations and exclude the performance and impact of selling DPA
Brazil
1
.

Fonterra Co-operative Group
Page 2

Mr Hurrell says higher margins across the Co-op's Ingredients, Foodservice and Consumer channels
have driven the lift in earnings, with gross margin up from 15.5% this time last year to 21.4%.

“Our Foodservice and Consumer channel performance is due to improved margins as well as the Co-op
allocating more milk to these higher returning channels.

“We've also seen continued strong performance in New Zealand Ingredients, but lower margins in
Australia Ingredients.

“Looking ahead, we expect these higher margins to continue throughout the first half of the year, before
tightening across all three sales channels in the second half of the year, due to higher input costs and the
gap between reference and non-reference product prices narrowing.

“Our increased forecast earnings guidance of 50-65 cents per share reflects this and we are on track for
a strong interim dividend,” says Mr Hurrell.

During the first quarter of FY24, the Co-op also continued to make progress against its strategy.

“In August, we returned 50 cents per share and unit following the completion of the sale of Soprole. We
also recently completed the divestment of DPA Brazil, as part of our plan to focus on our New Zealand
farmers’ milk.

“Our in-market teams are continuously working on new ways to commercialise our innovation expertise.

“This includes partnering with a customer in Japan to launch an adult milk powder containing our protein
and designed to target muscle loss, and partnering with a customer in Greater China to develop a cake
containing our probiotics in response to rising consumer interest in the health benefits of probiotics.

“As part of our plan to be a leader in sustainability, we introduced a target of a 30% reduction in on-farm
emissions intensity by 2030 (from a 2018 baseline) and have since been meeting with farmers to discuss
how the Co-op can collectively achieve it.

“We are pleased with the results for the first quarter of FY24 and see positive momentum across our
business as we work towards our 2030 goals,” says Mr Hurrell.

1
Including discontinued operations, FY24 Q1 Total Group profit after tax was $346 million.

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.

Fonterra Co-operative Group
Page 3

For further information contact:
Philippa Norman
24-hour media line
Phone: +64 21 507 072

---

©FONTERRA
¹
²²
QUARTER ONE BUSINESS UPDATE 20242
from $214m
from 13cfrom 13c
midpoint up 25 centsmidpoint up 5 cents

©FONTERRA
•Upgraded FY24 farmgate milk price and full year earnings forecasts
•Farmgate Milk Price: demand improving from key importing regions and well contracted
sales book
•Earnings range: reflects continued improved performance of Foodservice and Consumer
margins during first half, with tighter margins in all threechannelsinthe second half
•Foodservice and Consumer channel earnings up,reflecting improved margins and higher volumes
•Continued strong performance in New Zealand Ingredients but lower margins in
Australia Ingredients
•Our in-market teams continue to commercialise our innovative expertise by partnering with
customers to launch new products
•Introduced a target of 30% reduction in on-farm emissions intensity by 2030
•Completed the sale of DPA Brazil
QUARTER ONE BUSINESS UPDATE 20243©FONTERRA

©FONTERRA
JunJulAugSepOctNov
QUARTER ONE BUSINESS UPDATE 20244
202120222023
JunJulAugSepOctNov
Cumulative contracted volume
JunJulAugSepOctNov
500
250
Metric tonnes
(000’s)

©FONTERRA
3,000
4,000
5,000
6,000
Reference Product shipment price
Non-Reference Product shipment price
QUARTER ONE BUSINESS UPDATE 20245
Q1 FY23Q1 FY22Q1 FY24
Average Non-Reference price:USD 4,939
Average Reference price:USD 4,453
Price difference:
485
Average Non-Reference price:USD 4,333
Average Reference price:USD 3,426
Price difference:
907
Favourable price relativities compared to prior year
due to a 23% decline in Reference prices relative to a
12% decline in Non-Reference
3
3

©FONTERRA
214(2)
212
9
229(16)
28(70)
392(46)
346
QUARTER ONE BUSINESS UPDATE 2024
13 cents
EPS
Improved due to increased
gross margins in all three
channels: Ingredients,
Foodservice and Consumer
Impacted by the sale of
DPA Brazil
Continuing operations’ drivers
6
13 cents
EPS
24 cents
EPS
20 cents
EPS
FY23 Q1
Total Group
profit after tax
4
Discontinued
operations
profit after tax
FY23 Q1
Continuing
operations
profit after tax
VolumeMarginOperating
expenses and
other
Net finance
costs
TaxFY24 Q1
Continuing
operations
profit after tax
Discontinued
operations
profit after tax
FY24 Q1
Total Group
profit after tax
5

©FONTERRAQUARTER ONE BUSINESS UPDATE 20247
134146
14.4%
29.4%
FY23FY24
431415
13.9%
16.2%
FY23FY24
Volume (000' MT)
Gross margin
162174
23.9%
28.8%
FY23FY24

©FONTERRAQUARTER ONE BUSINESS UPDATE 20248
Lifted and narrowed range reflects:
•strengthening demand from key importing
regions for Reference Commodity Products
•well contracted sales book
per kgMS
2023/24
Season Forecast
2021/22 Season
$9.30
$8.22
USD/MT
2022/23 Season
Fonterra Reference Product shipment price
Average Reference Product shipment price for the season
GDT only Reference Product contract shipment price
1,000
2,000
3,000
4,000
5,000
6,000
May-21May-22May-23May-24

©FONTERRA
ma
QUARTER ONE BUSINESS UPDATE 20249
6
per share
Increasedearnings range reflects:
•well contracted sales book, locking in higher
margins for the first half of the year
•improved Foodservice and Consumer margins
during first half, but tightening in second half
•the impact of narrowing price relativities on
Ingredients’ margins in the second half
,
,
,
,
USD/MT
FY23
FY22
May-24
Q1
FY24
1,000
2,000
3,000
4,000
5,000
6,000
Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24
Fonterra Non-Reference shipment priceFonterra Reference shipment price
GDT only Non-Reference contract shipment priceGDT only Reference contract shipment price

©FONTERRAQUARTER ONE BUSINESS UPDATE 202410
1.FY24 Q1 includes $23 million attributable to non-controlling interests. Prior year comparative was $5 million
2.Excludes amounts attributable to non-controlling interests
3.Source: Fonterra Free Alongside Ship (FAS) prices of the New Zealand Ingredients Portfolio
4.Total Group profit after tax includes $5 million attributable to non-controlling interests
5.Total Group profit after tax includes $23 million attributable to non-controlling interests
6.Full year FY24 forecast earnings per share range is based on Continuing operations

©FONTERRAQUARTER ONE BUSINESS UPDATE 2024BUSINESS UPDATE 2024
12
•Gross margin up across all three channels
•Foodservice and Consumer channels achievedhigher
sales prices. Foodservice also benefitted from lower
input costs
•Ingredients –New Zealand Ingredients benefitting from
more favourable price relativities, partially offset by
tighter margins in Australia Ingredients reflecting higher
milk prices
•Operating expenses up, reflecting increased storage and
distribution costs to facilitate the higher sales volumes in
Foodservice and Consumer; and upfront costs of driving
efficiency initiatives
•Other up $17 million due to favourable net foreign
exchange movements
•EBIT up 63% driven by improved gross margins and higher
sales volumes in Foodservice and Consumer
•Net finance costs decreased 44% due to reduced
average borrowings
•Discontinued operations has decreased due to the loss on
sale of DPA Brazil ($72 million) which includes a loss of $68
million released from the Foreign Currency Translation
Reserve, offset by the FY23 divestments of Soproleand the
HanguChina Farm
∆
1
Sales volume (‘000 MT)727735
1%
Revenue5,3254,972
(7)%
Cost of goods sold(4,499)(3,908)
13%
Gross profit8261,064
29%
Gross margin (%)15.5%21.4%
Operating expenses(492)(525)
(7)%
Other
2
1936
90%
EBIT 353575
63%
Net finance costs(64)(36)
44%
Tax expense(77)(147)
(91)%
Profit after tax from continuing operations212392
85%
Profit after tax from discontinued operations2(46)
Total Group profit after tax
3
214346
62%
Earnings per share (cents)1320
54%
12
Note: Total Group figures are for the three months ended 31 October
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.Consists of other operating income, net foreign exchange gains/(losses) and share of equity accounted investees
3.Includes amounts attributable to non-controlling interests

©FONTERRA
831
832
801
875
794
20202021202220232024
4.24.2
4.4
5.8
5.1
20202021202220232024
746
785
661
944
1,130
20202021202220232024
553
560
513
581
630
20202021202220232024
266
235
190
368
536
20202021202220232024
149
121
116
214
346
20202021202220232024
QUARTER ONE BUSINESS UPDATE 202413
Note: Total Group figures are for the three months ended 31 October. This includes continuing and discontinued operations

©FONTERRA
(749)
(918)
(1,247)
(648)
(589)
20202021202220232024
178
250
190
368
608
20202021202220232024
61
134
116
214
418
20202021202220232024
QUARTER ONE BUSINESS UPDATE 202414
Note: Total Group figures are for the three months ended 31 October. This includes continuing and discontinued operations
1.Refer to glossary for definition

©FONTERRAQUARTER ONE BUSINESS UPDATE 2024
1.Current full season forecast
•Season to date collections June –October
were 489.4 million kgMS, 0.7% behind
last season
•The decrease in collections is due to lower
collections in the North Island partially offset
by improved collections in the South Island
•Unfavourableweather conditions in the
North Island have impacted pasture
quality and growth
•Favourable weather conditions in the
South Island have resulted in strong
milk flows in the central south
•On-farm costs remain elevated, putting
pressure on margins for some farmers and
influencing spending decisions
-
10
20
30
40
50
60
70
80
90
JunJulAugSepOctNovDecJanFebMarAprMay
2021/22
2022/23
2023/24
2021/221,478m (down 4.0%)
80m litres
2022/231,480m (up 0.1%)
78m litres
2023/241,465m
1
(down 0.1%)
76m litres
15

©FONTERRAQUARTER ONE BUSINESS UPDATE 202416
Represents the channel of branded consumer products, such as powders,
yoghurts, milk, butter, and cheese.
means operations of the Group that are not discontinued operations.
represents core operating functions including New Zealand milk
collectionand processing operations and assets, supply chain, Group IT
andSustainability; Fonterra Farm Source™retail stores; and the Strategy
andOptimisationfunction.
Is calculated as 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 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-ordinatedplan 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.
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, 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 alongside our business solutions under the Anchor Food
Professionals brand.
Is the total of net cash flows from operating activities and net cash flows
from investing activities.

©FONTERRAQUARTER ONE BUSINESS UPDATE 202417
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 NZ milk solids processed by Core Operations, except for
Reference Commodity Products.
means adjustments made for certain transactions that meet the
requirements of the Group’s NormalisationPolicy. These transactions are
typically unusual in size and nature. Normalisationadjustments are made to
assist users in forming a view of the underlying performance of the
business. Normalisedis used to indicate that a measure or sub-total has
been adjusted for the impacts of normalisationadjustments. E.g.
‘NormalisedEBIT’.
refers to the difference in the weighted average price (in USD) between the
Co-op’s Reference Product portfolio and Non-reference Product portfolio.
The difference between these two weighted average prices is a key driver of
the Co-op’s gross margin.
Fonterra has three product channels, Ingredients, Foodservice and
Consumer.
is commodity specifications of the five Reference Commodity Products
(RCPs) which are Whole Milk Powder (WMP) and Skim Milk Powder (SMP),
and their by-products Butter, Anhydrous Milk Fat (AMF) and Buttermilk
Powder (BMP). These commodity groups are included in the calculation of
the Farmgate Milk Price.
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.
Is used to indicate that a measure or sub-total comprises continuing,
discontinued operations and non-controlling interests. E.g. ‘Total Group
EBIT’.

©FONTERRA
This presentation may contain forward-looking statements, financial targets and ambitions (“Forward Statements”), each of which is based on a range of
assumptions.None of the Forward Statements is intended as a forecast, estimate or projection of the outcome that will, or is likely to, eventuate.They should not
be taken as forecasts or a guarantee of returns to shareholders.
There can be no certainty of outcome in relation to the matters to which the Forward Statements relate. Our ability to achieve the outcomes described in the
Forward Statements is subject to a number of assumptions, each of which could cause the actual outcomes to be materially different from the events or results
expressed or implied by such Forward Statements.
The Forward Statements also involve known and unknown risks, uncertainties and other important factors that could cause the actual outcomes to be materially
different from the events or results expressed or implied by such Forward Statements.Those risks, uncertainties, assumptions and other important factors are not
all within the control of Fonterra Co-operative Group Limited (“Fonterra”) and its subsidiaries (the “Fonterra Group”) and cannot be predicted by the Fonterra Group.
The Forward Statements in this presentation reflect views held only at the date of this presentation.
While all reasonable care has been taken in the preparation of this presentation, none of Fonterra, the Fonterra Group, or any of their respective subsidiaries,
affiliates and associated companies (or any of their respective officers, employees or agents) (together “Relevant Persons”) makes any representation or gives any
assurance or guarantee as to the accuracy or completeness of any information in this presentation or the likelihood of fulfilment of any Forward Statement or any
outcomes expressed or implied in any Forward Statement.Accordingly, to the maximum extent permitted by law, none of the Relevant Persons accepts any liability
whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of any Forward Statements or for any loss, howsoever arising,
from the use of this presentation.
Statements about past performance are not necessarily indicative of future performance.
Except to the extent (if any) as required by applicable law or any applicable Listing Rules (including the Fonterra Shareholders’ Market Rules), the Relevant Persons
disclaim any obligation or undertaking to update any information in this presentation.
This presentation does not constitute investment advice or opinions, or an inducement, recommendation or offer to buy or sellany securities in Fonterra or the
Fonterra Shareholders’ Fund.
QUARTER ONE BUSINESS UPDATE 202418

©FONTERRA
Fonterra uses several non-GAAP measures when discussing financial performance. Non-GAAP measures are not defined or specified byNZ 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 uniformlydefined or utilisedby 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 Glossary for definitions of non-GAAP measures referred to by Fonterra.
QUARTER ONE BUSINESS UPDATE 202419