Fonterra delivers another strong result for HY26

Fonterra Co-operative Group Limited

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 31/01/2026
Previous Reporting Period 6 months to 31/01/2025
Currency NZD
Amount (000s) Percentage change
Revenue from continuing operations
$12,464,000
9%
Total Revenue
$13,918,000
11%
Net profit from continuing operations
$700,000
6%
Total net profit
$750,000
3%
Interim Dividend
Amount per Quoted Equity Security $0.4000
Imputed amount per Quoted Equity Security $0.1556
Record Date 30/03/2026
Dividend Payment Date 14/04/2026
Current period Prior comparable period
Net tangible assets per Quoted Equity
Security
$4.36 $3.86
A brief explanation of any of the figures
above necessary to enable the figures to be
understood
Please refer to the unaudited 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 23/03/2026
Unaudited interim financial statements accompany this announcement.

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0B23 March 2026

Fonterra delivers another strong result for HY26

• Total Group revenue: NZ $13.9 billion, up by NZ $1.3 billion
• Operating profit: NZ $1,231 million, up from NZ $1,107 million
• Profit after tax: NZ $750 million, up from NZ $729 million
• Earnings per share: 45 cents per share, up from 44 cents last year
• Normalised earnings per share: 51 cents per share, up from 47 cents last year
• Continuing Operations return on capital: 11.2% up from 10.4%
• Interim dividend, fully imputed: 24 cents per share
• Special Mainland dividend, fully imputed: 16 cents per share
• Forecast Farmgate Milk Price range: NZ $9.40 - $10.00 per kgMS, with a midpoint of $9.70 per
kgMS
• Forecast milk collections: 1,565m kgMS, up 4%
• FY26 full year forecast earnings range for continuing operations: 50-65 cents per share

Fonterra Co-operative Group Ltd has today released its FY26 interim results, showing
continued momentum in its performance with revenue of $13.9 billion in the first half of the financial
year.

Fonterra announced an interim dividend of 24 cents per share, fully imputed, from continuing
operations and confirmed a special Mainland dividend of 16 cents per share, fully
imputed, representing 100% of Mainland Group’s FY26 earnings while under Fonterra ownership.

The Co-op has also lifted its forecast Farmgate Milk Price midpoint for the season from $9.50 per
kgMS to $9.70 per kgMS, with the range changing from $9.20 - $9.80 per kgMS to $9.40 -
$10.00 per kgMS.

Given the strength of these interim results, and our contracted commitments for the second half of
the year, we have also adjusted our full year earnings guidance for continuing operations from 45-
65 cents per share to 50-65 cents per share.

CEO Miles Hurrell says these changes to the forecast Farmgate Milk Price and
earnings reflect improvement in global commodity prices and the Co-op’s strong underlying
margins and cost control, but notes that significant volatility remains, particularly as the conflict in
the Middle East continues.

“The underlying performance of Fonterra’s continuing business is stable, allowing the Co-op to
return all earnings associated with the Mainland Group business and lift our forecasts for
the remainder of the year ahead. Demand for our products is strong, and we’re focused on our
plan to maximise both the Farmgate Milk Price and earnings,” says Mr Hurrell.

Fonterra Co-operative Group
Page 2

The record date for the two dividend payments will be 30 March, and the payment date will be
14 April. This is also the date Fonterra is targeting for payment of the $2.00 per share capital return
from the Mainland Group divestment, based on the transaction completing at the end of March.

Business performance

Total Group reported operating profit increased to $1,231 million from $1,107 million the year
prior.

Reported profit after tax is $750 million, equivalent to earnings per share of 45 cents and up on 44
cents last year. When excluding the costs associated with the Consumer divestment, Fonterra’s
normalised earnings per share are 51 cents.

The Co-op delivered a Return on Capital of 11.2%, up on this time last year and in line with the
target range of 10-12%.

“The first half of the year has been shaped by strong milk flows, with the Co-op collecting record
milk volumes in the South Island so far this season. When combined with several adverse weather
events, these conditions have put pressure on the operations of all New Zealand milk processors.

"We have been able to navigate through these challenges due to the resilience of our network,"
says Mr Hurrell. "Our performance shows that we are growing the high-value parts of our business
through optimal allocation of milk solids across our product mix, which is driving a strong return on
capital for shareholders and unit holders."

Fonterra’s market performance has been strong, with the Ingredients business delivering a return
on capital of 11% and Foodservice a return on capital of 12.6%. These results have been driven
by our protein portfolio in the Ingredients channel and improved pricing
in Foodservice to successfully recover the lift in butter and cream input costs seen last year.

Mainland Group performance improved during the first half of this year, primarily due
to a favourable commodity price cycle.

Progress on strategy

Over the course of FY26, Fonterra has made significant progress on the divestment of its global
consumer and associated businesses, Mainland Group, to Lactalis for $4.22 billion. The
transaction is unconditional and expected to complete at the end of March 2026.

“Our focus now is firmly on our strategy to grow value for farmers as a global B2B dairy nutrition
provider, working closely with customers through our high-performing Ingredients and Foodservice
channels.

“The foundation of our Co-op is our New Zealand milk supply. Fonterra has made it easier for new
farmer suppliers to join the Co-op and share up over time through changes to our shareholding
requirements, with greater flexibility in the level of investment required.

“We are focused on maximising value from farmers’ milk and are building new manufacturing
capacity across several New Zealand sites to help meet growing demand for our high-value
proteins, butters and creams,” says Mr Hurrell.

Projects underway include:

• Studholme - construction of the new advanced protein hub is now complete, with
first trial products off the line in February 2026.

• Clandeboye - commenced the build of our butter plant expansion in January 2026, with
product expected off the line in April 2027.

Fonterra Co-operative Group
Page 3

• Edendale – construction underway of new UHT cream plant and remains on track for first
products to come off the line in late 2026.

• Edgecumbe – today announcing a $35 million investment in expanding our pastry butter sheet
line, to support continued demand through Foodservice for butter products. Site works began
in March 2026, with product off the line expected in April 2027.

In addition, the Co-op's decarbonisation programme continues across key sites at Whareroa,
Edgecumbe, Waitoa, and Edendale to help secure energy supply, reduce emissions, and support
future processing growth.

Underpinning our business operations is the Co-op's Enterprise Resource
Planning system
0F
1
implementation, which has been deployed successfully at our first
three locations. The five-year programme remains on track and on budget and is expected to wrap
up in late 2028 with spend peaking across FY26 and FY27.

Outlook

Looking ahead, the conflict in the Middle East is having an impact on our supply chain and has the
potential to increase Fonterra’s inventory levels and costs over the course of the second half of
the year. There’s also the potential for further volatility in global commodity prices.

“The conflict is a complex and dynamic situation that is changing daily, but we are confident
that we’re on the right track to get product to customers.

“Our business is designed to manage volatility. Our scale and strong relationships with customers
and logistics provider Kotahi will help us to navigate through these challenges better than
most. With this in mind, we remain focused on delivering on our strategic targets,” says Mr Hurrell.

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.

For further information contact:

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



1
An IT and digital transformation project to replace the Co-op’s ERP software, to help future-proof the Co-op's critical
processes and systems and reduce cash costs over time.

---

Fonterra Co-operative Group
2026 Interim Results

Our Strategy

FY26 Interim Results Highlights
3
•Responding to strong milk flows and optimising product mix supports:
•Milk Price range of $9.40-$10.00 per kgMS, midpoint $9.70 per kgMS
•Increased FY26 continuing operations earnings range from 45-65 cents to
50-65 cents
•Fully imputed interim dividend of 40 cents
•Interim dividend of 24 cents
•Special Mainland dividend of 16 cents
•Mainland Group divestment completion by end of March
•Expected record date 9 April to receive $2.00 per share capital return on
14 April
•The combination of the dividends and the capital return will mean the Co-
operative distributes $3.9 billion in cash on 14 April 2026
•Operating profit $1.2b, up $124m due to improved pricing and product mix,
partially offset by higher milk input costs
•Profit after tax $750m, up $21m due to stronger earnings offset by higher
tax expense
•Includes $90m of cost related to the divestment and separation of
Mainland Group, including $54m of tax impacts
•Excluding divestment costs, earnings per share is 51c, up 4c on
prior year
•Return on capital of 11.2%, up from 10.4%.
•Net debt down $523m to $4.9b due to working capital movements and
stronger earnings
•Leverage metrics down on prior year supporting increased dividends

4
Progress on FY26 Priorities
•Challenging season due to weather events
andprocessingrecord volumes at some plants
•Maintaining our focus on optimal allocation of milk
solids across our product mix to generate the greatest
value for farmers
•Help future-proof the Co-op's critical processes and
systems, leading to reduced cash costs
•On budget and on track for completion in late 2028
•Now live at three sites
•Spend is expected to peak across FY26–FY27,
totalling approximately $240m over the period
•Studholme | $75M |
Advanced protein hub – Completed
•Edendale | $150M |
UHT cream expansion – on track for late 2026
•Clandeboye| $75M |
Butter line – build started January 2026
•Edgecumbe | $35M |
Pastry butter expansion – announced March 2026
Operational DisciplineInvesting for GrowthERP Rollout

Results at a glance
Profit after Tax
$750m
 from 729m
Operating Profit
$1,231m
 from 1,107m
Special
Mainland Dividend
16 cents
Interim Dividend
24 cents
 from 22c
Earnings per Share
(EPS)
45cents
 from 44c
Normalised
EPS
51cents
 from 47c
Return on Capital
11.2%
 from 10.4%
5
Note: For the six months ended 31 January. Prepared on a Total Group basis

5
10
15
22
24
16
6.1%
8.6%
13.4%
10.4%
11.2%
20222023202420252026
unimputed
5.6
5.8
4.2
5.5
4.9
5.3
3.2
2.62.6
44%
43%
35%
39%
37%
20222023202420252026
0.6
0.9
1.0
1.1
1.2
22
37
44
47
51
20222023202420252026
9.30
8.22
7.83
10.16
9.70
9.50
8.72
8.38
10.73
20222023202420252026
Performing well while progressing significant change
Operating Profit and EPSNet debt and Gearing
Normalised EPS (cents)
Reported operating profit ($b)
Gearing Ratio
Interim Net debt ($b)
Dividend and ROCTotal Payout ($)
Milk PriceInterim Dividend (cents)
Dividend
Milk Price ForecastFull Year Net debt ($b)
Special Mainland Dividend (cents)
Return on capital
6
Note: For the six months ended 31 January. Prepared on a Total Group basis

Supply growth continues;
prices supported by
selective demand
To be updated
Production
Imports
•Southeast Asia demand remains resilient, with consistent
buying reflecting underlying consumption support
•Middle East and Africa demand influenced by timing of
large government tenders into Algeria. Robust demand
observed across most countries, particularly through
Ramadan
•China’s import demand remains firm, supported by low
inventories and product mix shifting domestically away
from powders
•Strong production in the US and Europe has weighed on
global powder markets, partly offset by New Zealand
production easing seasonally, providing emerging
price support
•Growing domestic milk production in Latin America is
driving opportunistic demand for imported product
EUROPE
3-month4.2% 
12-month1.7% 
US
3-month4.0% 
12-month2.8% 
NZ
3-month2.3% 
12-month1.8% 
AUSTRALIA
3-month0.3% 
12-month
1.7% 
MEA
3-month24.0% 
12-month8.6% 
ASIA (ex China)
3-month1.0% 
12-month1.8% 
LATAM
3-month9.4% 
12-month0.1% 
CHINA
3-month2.6% 
12-month2.2% 
7

-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
YoY Milk Supply Change (%)GDT WMP Prices
Recent milk price resilience in spite of strong supply
8
$4,000
$4,400
June 24June 25June 23
Note: February 2024 has been normalised to adjust for leap year
$2,600
$3,200
$3,750
Farmgate Milk Price
2023/242024/252025/26
$7.83$10.16$9.70
Forecast
$3,500
$3,200
$3,200
$3,900

FY26 H1 earnings ahead of
prior year, despite higher
value of milk in first half
$6
$7
$8
$9
$10
$11
$12
JunJulAugSeptOctNovDecJanFebMarAprMay
FY25FY26
Higher milk cost at start of
season driven by demand
for WMP
•The average cost of milk was materially higher in the
first half of FY26 relative to FY25
•Primarily driven by an increase in protein-based
Reference product prices
•Therefore, a greater share of the milk cost uplift
are in the protein component
•The value of protein and fat within milk is an important
driver of the costs, and therefore earnings, attributed
to the Ingredients and Foodservice channels
•In FY26, the fat-weighted Foodservice channel
benefited from a lower allocation of the milk cost uplift,
with a greater share allocated to the protein-weighted
Ingredients channel
•The impact of the milk component costs informs the
Core Operations performance, its attribution to the
channels is presented on slide 12
2024/25 season monthly milk
prices average to $10.16, the
Farmgate Milk Price
2025/26 season forecast monthly
milk prices, informing the forecast
$9.70 Farmgate Milk Price midpoint
(range $9.40 - $10.00)
FY25 and FY26 monthly milk prices
($ per kgMS)
9

0
2
4
6
8
10
12
14
16
18
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2
Milk component costs impacting FY26 channel performance
+9%
FY24
FY25
FY26
0
2
4
6
8
10
12
14
16
18
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2
N/C
+7%
FY24FY25
FY26
+42%
Cost ($/kgMS)
Revenue ($/kgMS)
Cost ($/kgMS)
Revenue ($/kgMS)
Protein based products
Fat based products
•Ingredients portfolio impacted by material lift in protein costs relative to
revenue increase
•Foodservice portfolio benefited from an increase in revenue and an easing
fat costs over H1 FY26
10

769
20(20)
71840
FY25 Total Group
normalised
profit after tax
Operating ProfitNet finance costs
& tax
Mainland
& other
discontinued operations
FY26 Total Group
normalised
profit after tax
FY25 H1 to FY26 H1 normalised profit after tax
($ million)
Strong underlying performance, supported by Mainland upside
11
47c EPS
51c EPS
Includes one-off tax
impacts associated with
exiting a product line
Supported by higher volumes,
inventory revaluations and
easing input costs
Note: Prepared on a pro forma basis. Pro forma historical information has been prepared as if the Mainland transaction has already occurred (see slide 21 for further details)
Driven by Foodservice
margin growth

Strong channel performance delivering
sustainable return on capital
12
IngredientsFoodserviceTotal
External sales volume
(million kgMS)
625
1.2% 
141
3.7% 
766
0.4% 
Operating Profit contribution from remaining operations (excluding Mainland)
Core
Operations
$
47m
$245m 
$
174m
$199m 
$
221m
$46m 
In-market
$
513m
$65m 
$
198m
$1m 
$
711m
$66m 
Total
$
560m
$180m 
$
372m
$200m 
$
932m
$20m 
Return on Capital
11.0%12.6%11.4%
Note: Prepared on a pro forma basis. Pro forma historical information has been prepared as if the Mainland transaction has already occurred (see slide 21 for further details)

1,478
1,480
1,471
1,509
1,565
166
170
176
183
193
20222023202420252026
Forecast
Deliver strongest farmer offering
Fonterra supplier base and milk collections
Full season figures
8,895
8,709
8,376
8,235
8,120
Average number of farms
Strategy in action:
kgMS collected (million)
Average collections per farm (000’s kgMS)
•Net gains from competitors last season
•Targeted growth in South Island
•organic milk expansion
•high engagement ahead of contract roll-offs and ongoing
dairy conversions
•New offerings to support early-career farmers
•more flexibility in reaching shareholding requirements
•events at manufacturing sites to connect with senior
leaders and learn about the Co-op
•partnership with Growing Future Farmers, and the First
Farm Award will again be offered in 2026
Strong increase in milk collections
13

213
222
206
217
229
22.6%
24.0%
22.2%
22.6%
23.3%
12.1%
5%
21%
11.0%
5%
19%
IngredientsMilk PriceAdvanced
& Specialty
Cheese underpinning Advanced & Specialty volume growth
FY25
FY26
14
% of total milk solids manufactured
NZ milk solids manufactured (kgMS millions)
Advanced & Specialty subset
CheeseCaseinOther Proteins
Return on Capital
2223242526
UK Cheese – FTA Driven Growth
•Cheese volume growth a stand-out during the first half
•UK-NZ FTA – gold standard agreement; removes all UK
tariffs on NZ dairy over 5-year period (2023-2028)
•UK is the world’s second-largest dairy importing market
•Cheese contracted to the UK continues to grow, driven by
NZ’s grassfed provenance story and product functionality
•NZ dairy exports to the UK have increased from NZ$2m to
NZ$157m¹ following the FTA coming into force in May 2023,
led by cheese and butter
•Fonterra is building long-term partnerships with supplies,
including one of the UK’s largest cheddar customers
STRATEGY IN ACTION:
1. From year-end June 2022 to year-end June 2025

9.8%
12.6%
74
76
88
97
100
10.3%
9.8%
11.3%
12.6%
13.0%
2223242526
Momentum in Foodservice
15
% of total milk solids shipped
NZ milk solids shipped (kgMS millions)
Foodservice
Greater ChinaSoutheast Asia
Return on Capital
Anchor Easy bakery cream – expands to Southeast Asia
•Anchor Easy Bakery cream is successful in China,
overdelivering on forecasts
•Taking that success and learnings and scaling it into
Southeast Asia
•Launched in both Indonesia and Thailand with plans to
expand to further markets
•Diversifying cream product mix and building new customers
is a key activity to ready us for the Edendale asset coming
online early in 2027
STRATEGY IN ACTION:
2526
Foodservice

16
New Zealand manufacturing performance
94.5%
95.3%
95.8%
95.7%
96.0%
20222023202420252026
$72m
$56m
$92m
$99m
$75m
0.37%
0.26%
0.45%
0.41%
20222023202420252026
Cost of QualityMilk Utilisation
•Sustained improvement in product made right first
time, supporting consistent quality outcomes
for customers
•Future improvements driven by ongoing focus to
tighten process controls
•Cost of Quality reflects the cost absorbed in
operating an increasingly higher-value product mix
over time
•Focused on a strong and stable core in
manufacturing and Food Safety & Quality culture
•H2 focus remains on proactive risk management to
protect trust in source and avoid disruption
1.48
1.48
1.47
1.51
1.57
96.5%
96.3%
96.7%
96.6%
96.5%
20222023202420252026
Made Right First Time
Operational resilience sustaining performance as higher milk volumes are converted into a higher-value product
•Consistently high utilisation due to strong
operational capability and effective management of
seasonal variability
•More milk processed in the first half than last year
and higher peak processing without efficiency loss
Full year figures
ForecastForecastForecast
($ million)
% of NZ Milk Revenue
(kgMS billion)
Milk utilisation
16

Core Operations manufacturing cash costs
($/kgMS)
2.65
2.85
2.71
2.72
2.73
2.30
2.63
2.58
2.66
20222023202420252026
Inflation adjustedActual
Full year forecast efficiency metrics
Cash operating expenses
($/kgMS)
1.35
1.41
1.43
1.50
1.43
1.17
1.30
1.36
1.47
1.01
0.98
20222023202420252026
Inflation adjustedActualActual excluding ERP build & Mainland Group
•Cash operating expenses per kgMS are currently forecast at $0.98, meaning the
Co-op is tracking ahead of the FY26 strategic target, reflecting continued cost
discipline through the year
•Manufacturing cash costs per kgMS are forecast at $2.73 compared to the FY26
strategic target of $2.62, driven by higher input costs including lactose and
additional secondary processing costs, partially offset by higher milk solids
collections and ongoing efficiency gains
•The Co-operative is reviewing its approach to lifting manufacturing cost
performance as it works back toward the strategic targets
When the Co-operative released its strategy in September 2024, it published key
business drivers with targets for FY26 and FY27, including efficiency metrics - cash
operating expenses of $1.12 per kgMS (post Mainland divestment level) and New
Zealand manufacturing cash costs of $2.62 per kgMS for FY26.
17
ForecastForecast

534
621
558
635
53
47
56
167
30
79
106
128
617
747
720
930
~1,000
980
20222023202420252026
Planned
2027
Strategic
Target
Other capital invested
Growth capital expenditure
Essential capital expenditure
Invest in operations for the future
Capital invested
Full financial year figures ($ million)
•Forecasted FY26 total capital investment is $1b, with year-to-date capital invested of $383m (Essential $191m, Growth $133m and Other $59m).
•Majority of capital expenditure is weighted to the second half of the year due to the shape of the New Zealand milk supply curve, with the bulk of work on the manufacturing and
distribution assets undertaken during the winter period
•Essential capital expenditure is forecasted to be ~65% of total allocation. Of this, ~20% will be invested on decarbonisation and energy security projects as a part of our roadmap
to meet our sustainability commitments, ~5% on our wastewater assets to improve our environmental footprint and ~75% on maintaining and improving our asset network in New
Zealand and globally
•Increased growth capital expenditure forecast to be ~25% of total allocation. This is to supportthe growth of our Foodservice and Ingredients businesses, including capacity
expansion for high value products such as advanced proteins and UHT cream
•Other capital investment forecasted at ~10% of total allocation, includes Ki Tua Equity Investment Fund, Right of Use asset additions and other investments
18
20%
20%
10%
50%
65%
25%
10%
281
333
291
317
65%
54
51
54
71
5%
78
85
40
104
20%
76
92
114
88
15%
45
60
59
55
534
621
558
635
20222023202420252026
MainlandOther operations
DecarbonisationWastewater
NZ operations
Planned
~$650m
Breakdown of essential capital expenditure
Full financial year figures ($ million)

2025/26 Season
Forecast Farmgate Milk Price
2026 Full Year
Forecast earnings range¹
FY26 Outlook
$9.40-$10.00
per kgMS
50-65
cents per share
The forecast range reflects:
•First half pro forma continuing operations earnings of 35c, and forecasting for a
slightly lower H2
•higher sales volumes in H2 forecasted, with some compression ofmarginsdue
to rising input costs
•uncertainty related to Middle East conflict, including risks around input cost
inflation and shipping disruption
The forecast range reflects:
•well contracted sales book
•Continued firming of the reference portfolio prices on Global Dairy Trade during
February and March
•finely balanced supply and demand for Reference Products
•global geopolitical uncertainty, volatility in commodities and the USD/NZD
exchange rate, and the potential risk of elevated late season milk supply levels
19
1. Earnings forecast is prepared on a pro forma basis. Pro forma historical information has been prepared as if the Mainland transaction has already occurred (see slide 21 for further details)

Additional Financial
Information

Explanation of historical pro forma financials
This section shows historical pro forma financial information for Fonterra and Mainland Group, as if the transaction had already happened. The purpose is to help understand the
estimated financial impact of the transaction on Fonterra’s past financial performance and position, as if the transaction had already happened. It is not intended to represent the
actual or future financial performance or position of either Fonterra or Mainland Group.
The Fonterra reported historical financial information has been extracted from Fonterra Group’s financial statements for the six months ended 31 January 2026 and 31 January 2025.
Key assumptions supporting pro forma adjustments
1.Proceeds from the transaction
•The proceeds from the transaction are not included in the historical pro forma financial information, and as a result not included in the pro forma historical financial ratios
presented.
2.Raw Milk Supply Agreement, Global Supply Agreement and Distribution Agreement
3.Pro forma adjustments reflect the estimated impact of these agreements. Pro forma adjustments do not include changes to trading terms. Actual results may differ from these
estimates
4.Transitional Services Agreement
•A Transitional Services Agreement has been signed for a defined period. The costs of delivering these services have been included in Discontinued operations in Fonterra’s
financial statements
5.Standalone Corporate Costs
•Standalone corporate cost pro forma adjustments have not been made in the Mainland Group’s historical pro forma Statement of Profit or Loss, as Lactalis will set up its
own corporate structure and cost base
6.Divestment costs
•Normalisation adjustments for divestment transaction costs of $36 million (six months to January 2026) and $40 million (six months to January 2025) have been made to
Fonterra reported results and the Mainland Group
7.Intercompany Borrowings
•Intercompany borrowings between Fonterra and Mainland Group are fully eliminated in Fonterra’s consolidated financial statements. As a result, repayment or restructuring
is not reflected in the historical pro forma financial information. The transaction is assumed to settle on a debt-free basis
8.Dividend Policy
•The transaction is not expected to change Fonterra’s current dividend policy of distributing 60–80% of reported net profit after tax (excluding abnormal gains)
21

For the six months ended
31 January
2025
2026
NZD million
Fonterra
Total Group
reported
Fonterra
historical Pro
Forma
Pro Forma
Group
Eliminations
Mainland
Group
historical Pro
Forma
Fonterra
Total Group
reported
Fonterra
historical Pro
Forma
Pro Forma
Group
Eliminations
Mainland
Group
historical Pro
Forma
Revenuefrom sale of goods
12,592 11,317(1,648)2,92313,918 12,328(1,693)3,283
Cost of goods sold (excluding
depreciation and amortisation)
(10,143)(9,437)1,648(2,354)(11,345)(10,383)1,693(2,655)
Gross profit
2,449 1,880
-5692,573 1,945-628
Operating expenses (excluding
depreciation and amortisation)
(1,112)(778)-(334)(1,150)(803)-(347)
Other
87 72-1567 46-21
EBITDA
1,424 1,174
-2501,490 1,188-302
Depreciation and amortisation¹
(317)(262)-(55)(259)(256)-(3)
Operating profit (EBIT)
1,107912
-1951,231 932-299
Net finance costs
(85)(84)-(1)(88)(87)-(1)
Profit before tax
1,022 828
-1941,143 845-298
Tax expense
(293)(252)-(41)(393)(269)-(124)
Profit after tax
729 576-153750 576-174
Normalisation adjustments (EBIT)
40--4036--36
Normalised operating profit (EBIT)
1,147 912
-2351,267 932-335
Normalisation adjustments(NPAT)
40-
-4090--90
Normalised profit after tax (NPAT)
769 576
-193840 576-264
Total Group historical pro forma Statement of P&L
1.Depreciation and amortisation presented above have been extracted from Cost of goods sold and Operating expenses line items within Fonterra Reported Statement of Profit or Loss
22

For the six months ended 31 January
2025
2026
NZD million
Fonterra
reported
continuing
operations
Pro Forma
Adjustments
Fonterra
historical Pro
Forma
Fonterra
reported
continuing
operations
Pro Forma
Adjustments
Fonterra
historical
Pro Forma
Revenuefrom sale of goods
11,400(83)11,317
12,464
(136)12,328
Cost of goods sold (excluding depreciation and amortisation)
(9,449)12(9,437)
(10,401)
18(10,383)
Gross profit
1,951(71)1,880
2,063
(118)1,945
Operating expenses (excluding depreciation and amortisation)(778)-(778)(803)-(803)
Other72-72
46
-46
EBITDA
1,245(71)1,174
1,306
(118)1,188
Depreciation and amortisation¹(262)-(262)(256)-(256)
Operating profit (EBIT)983(71)9121,050(118)932
Net finance costs(84)-(84)(87)-(87)
Profit before tax899(71)828963(118)845
Tax expense(241)(11)(252)(263)(6)(269)
Profit after tax658(82)576700(124)576
Continuing operations historical pro forma Statement of P&L
1.Depreciation and amortisation presented above have been extracted from Cost of goods sold and Operating expenses line items within Fonterra Reported Statement of Profit or Loss
Compiled by extracting the results of Continuing operations. Pro forma adjustments have been made to:
•remove the effects of Fonterra’s existing transfer pricing arrangements related to Mainland Group that will cease post divestment; and
•recognise the impact of the Raw Milk Supply, Global Supply, and Distribution Agreements
23

For the six months ended
31 January
Total Group
Continuing operationsDiscontinued operations
NZD million20252026∆%20252026∆%20252026∆%
Sales volume ('000 MT)1,7231,7270%1,4721,455(1)%2512728%
Sales volume (million kgMS)7897991%769766(0)%203365%
Revenue from sale of goods12,59213,91811%11,40012,4649%1,1921,45422%
Cost of goods sold(10,364)(11,524)(11)%(9,631)(10,580)(10)%(733)(944)(29)%
Gross profit 2,2282,3947%1,7691,8847%45951011%
Gross margin (%)17.7%17.2%15.5%15.1%38.5%35.1%
Operating expenses(1,208)(1,230)(2)%(858)(880)(3)%(350)(350)-
Other
1
8767(23)%7246(36)%152140%
Operating profit1,1071,23111%9831,0507%12418146%
Net finance costs(85)(88)(4)%(84)(87)4%(1)(1)-
Tax expense(293)(393)(34)%(241)(263)(9)%(52)(130)(150)%
Profit after tax
2
729 7503%6587006%7150(30)%
Earnings per share (cents)
4445
2%
40
42
5%
4
3(25)%
Normalisations
3
4090125%(82)
(124)(51)%
122
21475%
Normalised profit after tax
3
7698409%576
576-
193
26437%
Normalised EPS (cents)
47519%35
35-
12
1633%
Total Group performance
1.Comprises of other operating income, net foreign exchange gains and share of profit or loss of equity accounted
investees
2.Includes amounts attributable to non-controlling interests
3.Total Group Normalisations of $(90)m relating to the divestment of Mainland Group; consisting of divestment
costs $(36)m and tax impacts $(54)m (2025: $(40)m). Inter-Group normalisations of $138m (2025: $109m)
between Continuing and Discontinued operations reflecting trade terms for sales and purchases between the
Group and Mainland Group that will change following the divestment. Refer to Note 1 in the 2026 Interim
Financial Statements. The balance relates to the supply agreements between Fonterra and Mainland Group.
24

End-to-end Channel performance
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 profit or loss of equity
accounted investees
3.Includes corporate costs of $299m in FY26 (FY25: $277m). Allocation between Ingredients and Foodservice of
$217m and $82m (FY25: $198m and $79m), respectively
For the six months ended 31 January
Total Pro Forma Continuing OperationsIngredientsFoodservice
NZD million20252026∆%
¹
2025202620252026
Sales volume ('000 MT)1,4721,455(1)%1,1591,137313318
Sales volume (million kgMS)769766(0)%633625136141
Revenue11,31712,3289%8,7329,4962,5852,832
Cost of goods sold(9,619)(10,562)(10)%(7,469)(8,388)(2,150)(2,174)
Gross profit 1,6981,7664%1,2631,108435658
Operating expenses(858)(880)(3)%(578)(598)(280)(282)
Other
2
7246(36)%555017(4)
Operating profit
3
9129322%740560172372
Gross margin15.0%14.3%14.5%11.7%16.8%23.2%
Operating profit margin8.1%7.6%8.5%5.9%6.7%13.1%
25

382
74
228
105
45
51
57
335
84
244
112
42
50
60
356
84
228
101
53
45
60
362
84
245
110
52
44
64
367
82
247
115
56
50
64
Whole Milk PowderSkim Milk PowderCream
(Butter and AMF)
CheeseCream (other)CaseinOther Proteins
Breakdown of milk solids allocated to product groups
Reference ProductsNon-Reference Products
NZ milk solids manufactured (kgMS millions)
For six months ended 31 January
% milk solids manufactured
1. Changes in table present total NZ manufactured milk solids and does not align to charts which exclude Butter Milk Powder, and other smaller Non-Reference commodity groups
2223242526222324252622232425262223242526222324252622232425262223242526
7.9%
9.1%9.1%8.8%8.3%
40.5%
36.1%
38.4%
37.7%
37.4%
24.2%
26.3%
24.6%
25.5%
25.2%
11.2%
12.1%
10.9%
11.4%
11.7%
4.8%
4.6%
5.7%
5.4%
5.7%
5.4%
5.4%
4.9%
4.6%
5.1%
6.0%
6.5%
6.4%
6.6%
6.5%
Whole Milk Powder:
•Robust long term demand growing organically at improved price levels across Middle East and Africa,
Southeast Asia and China
•Higher milk solids allocation driven by increased milk supply in 2026, with proportion of total milk solids
below the prior year, in line with strategic decisions to allocate milk solids into higher value products
Cream:
•Butter demand across Greater China, Europe and the United Kingdom remains strong supporting an
increase in allocation of milk solids into the cream portfolio, both Reference and Non-Reference
•Higher relative returns from butter over AMF supported the prioritisation of milk solids into butter production
Cheese:
•Cheese volumes are expected to remain strong, with FY26 forecast to exceed FY25
•Early contracting helped to secured demand ahead of increased US export availability from recent
capacity investments
Casein & other Proteins:
•Allocation of solids to proteins continues to be supported by strong and sustained demand, led by
partnership customers, and driven by growth in Adult and Medical Nutrition applications
Change in kgMS millions
1
TotalReferenceNon-Reference
 20 4 16
26

255
485
442
82
137
423
14.8%
14.2%
13.4%
8.3%
11.2%
12.0%
-80.0%
-70.0%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10. 0%
20. 0%
0
100
200
300
400
500
600
700
800
900
1000
FY25 Q1FY25 Q2FY25 Q3FY25 Q4FY26 Q1FY26 Q2
Operating profit ($ million)Gross margin (%)
740(245)
(10)
82(7)
560
FY25 H1
operating
profit
Core
Operations
VolumeMarginOperating
expenses
and other
FY26 H1
operating
profit
Key performance drivers
Operating profit ($ million)
In-market performance
Quarterly performance
FY26 H1
•Ingredients operating profit is down $180m, due to:
–lower attribution from Core Operations reflecting higher cost of protein being
expensed through FY26 relative to prior year
–Sales volumes lower as milk shifted into higher-value products and management
of inventory
–favourable in-market margins due to strong protein prices in Europe and US
•The impact of costs associated with upgrading our ERP system are in Core
Operations allocation
•FY26 Q3 shipment volumes expected to be higher reflecting increased milk collections
during first half of milk season
•Second half gross margins are expected to be broadly in line with first half
Note: For the six months ended 31 January. Prepared on a pro forma basis. Pro forma historical information has been prepared as if the Mainland transaction has already occurred (see slide 21 for further details)
27
Ingredients: Improved functional protein margins in-market

2,500
3,500
4,500
5,500
6,500
Impact of price relativities smoothed by financial trading portfolio
Fonterra Revenue Reference and Non-Reference
Price Relativities
(USD/MT)
H1 FY24H1 FY25H1 FY26
Non-Reference Product shipment price
Reference Product shipment price
•Revenue price relativities widened during FY26 H1. Compared to the same time last year, the average price for the Non-Reference
portfolio increased USD 404 per MT or 9%, compared with the Reference portfolio, which increased USD 210 per MT or 5%
•Continue to reduce earnings volatility from the impact of price relativities as the Co-op’s developing financial trading portfolio
moderated the physical portfolio dynamics. The hedging impact last year was favourable relative to the narrowing of price relativities,
compared to this year not capturing all upside in the widening between the Reference and Non-reference portfolio
•For the full year, the Co-op’s current earnings guidance reflects the net price relativity position to be neutral year on year
Q1Q2H1
Average Non-Reference price
4,3984,5344,473
Average Reference price
3,9243,8213,852
Price difference
474713621
Q1Q2H1
Average Non-Reference price
4,9144,8464,877
Average Reference price
4,3403,9424,062
Price difference
574904815
28
Note: Reference shipment prices presented are ‘Milk Price Informing’ prices only, a subset of the Reference portfolio

For the six months ended
31 January20252026Change
Sales Volume (‘000 MT)
Reference Products844
823(2)%
Non-Reference Products439
48110%
Revenue (NZD)
Reference Products ($ billion) 5.7
6.29%
Non-Reference products ($ billion) 3.3
3.918%
Reference Products ($ per MT) 6,783
7,55811%
Non-Reference products ($ per MT) 7,395
8,19411%
Cost of Milk (NZD)
Reference Products ($ billion) (4.5)
(4.8)(7)%
Non-Reference Products ($ billion) (1.8)
(2.1)(17)%
Reference Products ($ per MT)(5,352)
(5,814)(9)%
Non-Reference Products ($ per MT)(3,989)
(4,454)(12)%
New Zealand-sourced Ingredients’ product mix
Note: Percentages as shown in table may not align to the calculation of percentages based on numbers in the table due to rounding of figures
Table includes Ingredients’ products that are on-sold to the Foodservice channel and excludes bulk liquid milk. Bulk liquid milk for 2026 was 39,000 MT of kgMS equivalent (for the comparative period it was 36,000 MT of kgMS equivalent).
Milk solids used in the Reference Products sold were 465m kgMS and 232m kgMS in the Non-Reference Products (for the comparative period 470m kgMS in Reference Products and 215m kgMS in Non-Reference Products)
29
•Revenue growth reflects a product mix shift into higher-value
Non-Reference products, which drove a larger absolute
increase in revenue less cost of milk, despite stronger milk cost
allocation moderating the per metric tonne margin benefit within
that portfolio

58
114
40
23
152
220
14.9%
18.6%
14.1%
16.2%
21.1%
25.2%
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20. 0%
40. 0%
0
100
200
300
400
500
600
700
800
900
1000
FY25 Q1FY25 Q2FY25 Q3FY25 Q4FY26 Q1FY26 Q2
Operating profit ($ million)Gross margin (%)
172
199-(6)
7372
FY25 H1
operating
profit
Core
Operations
VolumeMarginOperating
expenses and
other
FY26 H1
operating
profit
FY26 H1
Foodservice: End-to-end margin growth as input costs ease
Key performance drivers
Operating profit ($ million)
Quarterly performance
30
•Foodservice operating profit is up $200m, due to:
–higher attribution from Core Operations reflects easing in milk costs expensed
–in-market volumes flat, growth in Quick Service Restaurant sector offset by
rationalising residual Consumer business
–Pricing and product mix supported margins while input cost pressure eased over
first half
–Improved operating expenses reflect rationalising of the residual
Consumer business in Greater China
•Anticipate some margin compression in H2 as input costs expected to increase
Note: For the six months ended 31 January. Prepared on a pro forma basis. Pro forma historical information has been prepared as if the Mainland transaction has already occurred (see slide 21 for further details)
In-market performance

•Net debt reduced $0.5b from $5.45b to $4.93b,
driven by:
•Stronger earnings and a higher suppliers
payable balance, which together have
supported dividend payments and higher
capital expenditure
•Gearing ratio decreased reflecting:
•Lower net debt and an increase in retained
earnings
Resilience of the balance sheet reflected in key metrics
and ‘A band’ credit rating
31
5.6
5.8
4.2
5.5
4.9
5.3
3.2
2.62.6
20222023202420252026
Half YearFull Year
47.3
44.1
43.3
34.6
39.4
36.5
38.5
42.4
28.8
24.0
23.9
202120222023202420252026
Half YearFull Year
Working capital days
9898
92
93
92
20222023202420252026
S&P Global
Ratings
A-Stable outlook
Fitch RatingsAStable outlook
Gearing ratio (%)
Credit rating
Net debt ($ billion)

33(354)
533
416(103)
(2,069)
(1,544)
FY25 H1
free cash
flow
EarningsTaxes PaidTrade
Working
Capital
Owing to
Suppliers
Capex and
other
divestments
FY26 H1
free cash
flow
Free cash flow remains a key focus
•Free cash flow for the first six months is typically an outflow, reflecting the seasonal nature of the business
•Free cash flow for the first six months ending 31 January 2026 was a $1,544m outflow, a smaller outflow from the prior period due to:
•an improvement in trade working capital cash flows of $0.5 billion. Reflecting a reduction in the price of inventory per MT on hand over the current six-month period compared
to the comparative six-month period, partly offset by continued growth in volume due to higher milk collections
•owing to suppliers of $0.4 billion largely due to the accelerated advance rate in the prior season, which reduced the opening balance in the current period
•lower cash flows from earnings reflect higher taxes paid of $0.35 billion in 2026
(849)
(30)
(397)
(2,069)
(1,544)
FY22 H1FY23 H1FY24 H1FY25 H1FY26 H1
Five-year trend
($ million)
Movements in free cash flow
($ million)
32

Return on capital
For the 12 months ended 31 January
NZD million
20252026
Total Group normalised operating profit1,7211,960
Finance income on long-term advances148
Notional tax charge(468)(531)
Total Group net normalised operating profit after tax1,2671,437
Capital employed at 31 January13,78913,842
Impact of seasonal capital employed(1,630)(997)
Average capital employed12,15912,845
Return on capital10.4%
1
11.2%
33
•Return on capital of 11.2%, above last year and tracking to
be within FY26 target range of 10 – 12%
•The change relative to previous period reflects:
−$239m higher operating profit as previous period
includes higher H2 FY25 earnings; and
−$686m increase in average capital employed is
mainly due to higher average inventory
1. FY25 has been restated to reflect the normalisation of Mainland divestment costs

($ million)20252026
Average capital employed
6,8117,254
Net operating profit after tax
2
823797
Return on capital (%)
12.1%11.0%
741
1,121
1,650
1,267
1,437
12,146
13,005
12,303
12,159
12,845
20222023202420252026
Total Group net operating profit after tax ($m)²Average capital employed ($m)
Return on capital
6.1%
8.6%
13.4%
10.4%
11.2%
Note: Figures presented are on a 12-month basis to 31 January and include impairments
1.Prepared on a pro forma basis. Pro forma historical information has been prepared as if the Mainland
transaction has already occurred (see slide 21 for further details)
2.Normalised basis
•Return on capital of 11.2%, above the 5-year average and tracking to be
within the FY26 target range of 10 – 12%
•Total Group return on capital includes Mainland return on capital of 9.2%, up
from 7.1%
Ingredients
11.0%
 from 12.1%
Foodservice
12.6%
 from 9.8%
Pro forma return on capital by channel
1
Total Group return on capital
Average capital employed
2,3922,515
Net operating profit after tax
2
234318
Return on capital (%)
9.8%12.6%
For 12-month period to 31 January
34
Return on capital trend and channel
performance

Appendix

FY26 Integrated Scorecard
as at 31 January 2026
Key MetricsFY24 ActualFY25 ActualFY26 ScorecardFY26 YTD
PeopleSerious harm¹16
651
Quality of post-Health, Safety and Wellbeing incident actions
0.410.40.60.51
Culture Measure
79818079
NatureGHGemissionsreduction (Scope1,2)²
(18.5)%(20.7)%(26.7)%(26.1)%
Additional percentage of New Zealand supplying Farms achieving Emissions Excellence
–(2.2)%6%³–
Relationships
Share of NewZealand milk collected for the season to 31 May78.1%77.8%78%77.8%
Delivered in full, on time (DIFOT, at time of arrival)66.1%73.7%77%81.5%
Financial / Assets
& Infrastructure
Cash operating expenses per kgMS (real)⁴1.431.501.411.43
Core Operations manufacturing cash costs per kgMS (real)⁵2.712.722.652.73
Return on capital (FY)11.3%10.9%10%-12%On track
Farmgate Milk Price ($)$7.83$10.16$9.00-$11.00$9.40-$10.00⁶
Alignment Rights
Total shareholder return
(Volume weighted average share price plus distributions (dividend, capital returns))⁷
$2.66
$0.55
$4.70
$0.57
Not Available5.34
TBC
On-farm profitability ($ per hectare)⁸$2,845–Not AvailableNot Available
1.Includes Contractors.
2.Relative to FY18 Baseline. Scope 1&2 including farms under our operational control.
3.Additional 490 farms with minimum of 270 reducing footprint. FY26 performance available at completion of season.
4.Based on New Zealand and Australia milk solids. Excludes divestment-related costs. Restated to FY26 base year.
5.Based on New Zealand milk solids collected. Excludes the cost of milk. Restated to FY26 base year.
6.Latest Forecast Farmgate Milk Price announced 23 March 2026 with midpoint of $9.70 per kgMS.
7.For the period 1 October to 30 September. As an indication, FY26 YTD is the 12-month VWAP to 30January 2026.
8.DairyNZ Economic Survey 2023-2024 (Owner-Operator). Publication of 2025 survey expected in July 2026.
36

Data sources
Dairy Production and Imports
•12-month production
−Australia, New Zealand, US (Feb 2024 – Jan 2025 compared to Feb 2025 – Jan 2026) Dairy Australia, DCANZ, USDA
−EU (Feb 2024 – Jan 2025 compared to Feb 2025 – Jan 2026), Eurostat
•3-month production
−Australia, New Zealand, US (Nov 2024 – Jan 2025 compared to Nov 2025 – Jan 2026) Dairy Australia, DCANZ, USDA
−EU (Nov 2024 – Jan 2025 compared to Nov 2025 – Jan 2026) Eurostat
•12-month imports
−China, LATAM, Middle East & Africa (Jan 2024 – Dec 2024 compared to Jan 2025 – Dec 2025) S&P Global
−Asia (excl. China) (Dec 2023 – Nov 2024 compared to Dec 2024 – Nov 2025) S&P Global
•3-month imports
−China, LATAM, Middle East & Africa (Oct 2024 – Dec 2024 compared to Oct 2025 – Dec 2025) S&P Global
−Asia (ex. China) (Sep 2024 – Dec 2024 compared to Sep 2025 – Nov 2025) S&P Global
37

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 Glossary for definitions of non-GAAP measures referred to by Fonterra.
38
Non-GAAP Measures
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 employed
is a 13-month rolling average of capital employed
Bulk liquids
means bulk raw milk that has not been processed and bulk
separated cream
Capital employed
is 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 invested
is capital expenditure plus right of use asset (e.g. leases)
additions and business acquisitions, including equity
contributions, long-term advances, and other investments
Cash operating expenses per kgMS
is continuing operations operating expenses, less non-cash
costs (depreciation, amortisation and impairments. Shown by
kilogram of New Zealand and Australia milk solids collected
Consumer
is the channel of branded consumer products, such as powders,
yoghurts, milk, butter and cheese
Continuing operations
means operations of the Group that are not discontinued
operations
Core Operations
represents core operating functions including New Zealand milk
collection and processing operations and assets, supply chain,
Fonterra Farm Source retail stores, and the physical and
financial commodity portfolio management function
Core Operations manufacturing cash costs per kgMS
is the logistics costs, variable and fixed costs of the COO business
unit less non-cash costs (depreciation, amortisation and
impairment) shown by kilogram of New Zealand milk solids
collected. Excludes milk, ocean freight and farm costs.
Debt to EBITDA
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, net foreign exchange gains/losses and any
normalised EBITDA relating to entities divested during the year
Discontinued operations
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
coordinated 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
Eliminations
represents eliminations of inter-business unit sales
Gearing ratio (%)
is adjusted net debt divided by total capital. Total capital is equity
excluding hedge reserves, plus adjusted net debt
Global Markets Consumer & Foodservice
represents the Ingredients, Foodservice and Consumer channels
in the Middle East and Africa, Oceania, South and South-East
Asia regions
Global Markets Ingredients
represents the Ingredients, Foodservice and Consumer channels
in the Middle East and Africa, Oceania, South and Southeast Asia
regions
Glossary

Glossary
Greater China
represents the Ingredients, Foodservice and Consumer
channels in Greater China
Ingredients
represents the channel comprising bulk and specialty dairy
products such as milk powders, dairy fats, cheese and proteins
manufactured in New Zealand, Australia and Europe, or
sourced through our global network, and sold to food producers
and distributors
Net debt
is 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
Non-Reference Products
means all NZ milk solids processed by Core Operations, except
for Reference Commodity Products
Normalisation adjustments
means 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. Normalised is used to indicate that a measure
or sub-total has been adjusted for the impacts of normalisation
adjustments. E.g., ‘Normalised EBIT’
Price relativities
refers to the difference in the weighted average price (in USD)
between the Reference Product portfolio and Non-Reference
Product portfolio. The difference between these two weighted
average prices is a key driver of the Ingredients’ gross margin
Reference Products
are the five commodity groups used to calculate the Farmgate
Milk Price, being Whole Milk Powder (WMP) and Skim Milk
Powder (SMP), and their by-products Butter, Anhydrous Milk Fat
(AMF) and Buttermilk Powder (BMP)
Total Group
is used to indicate that a measure or sub-total comprises
continuing operations, discontinued operations and non-
controlling interests. E.g., ‘Total Group operating profit’
Trade working capital
is total trade and associate receivables plus inventories, less
trade and associate payables and accruals. It excludes amounts
owing to suppliers and employee entitlements and includes trade
working capital classified as held for sale
Working capital days
is calculated as 13-month rolling average working capital divided
by revenue from the sale of goods (excluding impact of derivative
financial instruments) multiplied by the number of days in the
period. The working capital days calculation excludes other
receivables, prepayments, other payables and includes working
capital classified as held for sale
Foodservice
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 in
alongside our business solutions under the Anchor Food
Professionals brand
39

Forward looking statements
This presentation contains certain forward-looking statements. There are risks (both known and unknown), uncertainties, assumptions and other important factors that could cause the
actual conduct, market conditions, results, performance or achievements of Fonterra to be materially different from the future conduct, market conditions, results, performance or
achievements expressed or implied by the forward looking statements, or that could cause future conduct to be materially different from historical conduct. Deviations as to future
conduct, market conditions, results, performance and achievements are both normal and to be expected.
Forward looking statements generally may be identified by the use of forward looking words such as ‘target’, ‘targeting’, ‘aim’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘forecast’,
‘foresee’, ‘future’, ‘intend’, ‘likely’, ‘may’, ‘planned’, ‘potential’, ‘should’, or other similar words.
Any estimates or projections as to events that may occur in the future (including EBITDAF, revenue, profit, underlying profit, dividends, margin, expenses, earnings, assets, liabilities
and performance) are based upon the best judgement of Fonterra from the information available as of the date of this presentation. A number of factors could cause actual results or
performance to vary materially from the estimates or projections. No person (including Fonterra and its directors, officers, employees and advisers) gives or makes any representation,
warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur or, except to the
extent (if any) required by applicable law or any applicable Listing Rules, assumes any obligation to provide any additional information or update these forward looking statements for
events or circumstances that occur subsequent to the date of this presentation. No reliance should be placed on any forward looking statements.
Non-NZ 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.
Not financial advice
This presentation does not take into account the individual investment objectives, financial situation or needs of any shareholder. Shareholders must make their own decisions and seek
their own advice in this regard. The information contained in this presentation does not constitute, and should not be taken as constituting, financial advice, financial product advice,
investment advice, tax advice or legal advice. In particular, this presentation does not constitute a recommendation or offer to buy or sell securities in Fonterra or the Fonterra
Shareholders’ Fund.
Important Cautions and Disclaimer
40

---

Interim Report 2026
Pūrongo Taupua

Message from our Chair and CEO3
Our strategy6
Progress on strategy7
Financial overview 8
Deliver the strongest farmer offering
12
Unleash our Ingredients engine
13
Keep momentum in Foodservice
14
Invest in operations for the future
15
Build on our sustainability position
17
Innovate to drive our advantage
18
Interim Financial Statements19
Independent Auditor’s Review Report20
Interim Financial Statements22
Basis of Preparation26
Notes to the Interim Financial Statements28
Non-GAAP measures39
Glossary42
Directory46
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 of this report for reconciliations of NZ IFRS to non-GAAP
measures, and the Glossary for definitions of non-GAAP measures referred to by Fonterra.
Front cover:
Dave, Southland
Barlass Farm, Canterbury
Contents
Fonterra Interim Report 2026
2

Kia ora,
On behalf of your Board and management team, we are
pleased to share with you Fonterra’s FY26 interim results.
The Co-op has had a strong first half, maintaining
consistent financial performance while also completing the
Mainland Group divestment, which has been a significant
programme of work.
During the first half of the year, the Co-op delivered
revenue of $13.9 billion and a return on capital of 11.2%, up
on this time last year.
The Co-op is forecasting a Farmgate Milk Price midpoint of
$9.70 per kgMS and has announced an interim dividend of
24 cents per share fully imputed.
Fonterra has also confirmed a special Mainland dividend
of 16 cents per share, fully imputed, made up of 100% of
FY26 underlying earnings from Mainland Group while the
business has been under the Co-op’s ownership.
As we close out the sale of Mainland Group to Lactalis for
$4.22 billion, our priority now is implementing our strategy
to grow further value for farmer shareholders and unit
holders as a global B2B dairy provider.
Peter McBride
Chair
Miles Hurrell (right)
Chief Executive Officer
Message from our Chair & CEO
Delivery
of strategy
driving results
3
Fonterra Interim Report 2026
ContentsOur StrategyProgress Interim Financial StatementsNon-GAAP MeasuresDirectoryGlossaryChair & CEO

First half performance
This season has seen above average milk flows in
New Zealand and globally, putting downward pressure
on global commodity prices earlier in the season. Pricing
has recovered more recently and this has been reflected
in another lift in our forecast Farmgate Milk Price for
the season.
Increased milk collections also put pressure on our
New Zealand operations, particularly when combined
with several adverse weather events. The resilience of our
network has meant we have been able to operate through
these challenges, but we acknowledge some farmers had
their milk collections disrupted. At all times, it remains our
Co-op’s priority to reliably collect and process farmers’ milk.
We continue to place a strong emphasis on attracting new
farmers to the Co-op as well as retaining current suppliers.
There are promising signs of securing additional milk,
particularly in the South Island where we have collected
record milk volumes this season. We are also making it
easier for new farmer suppliers to join the Co-op and
share up over time through changes to our shareholding
requirements.
Throughout the season, we have maintained our focus on
enhancing both the Farmgate Milk Price and earnings by
optimising our product mix and allocating farmers’ milk to
the highest returning product.
We’re seeing strong demand for our proteins, creams
and cheeses through our Foodservice and Ingredients
businesses and have a pipeline of investments planned
to increase our capacity to manufacture these high
value products.
These investments will help support our goal of returning
the Co-op’s earnings to FY25 levels by FY28, offsetting
the divestment of Mainland Group. The other element
of achieving this goal is taking costs out of the business.
We have initiatives underway to improve operational
efficiencies and reduce manufacturing costs over the
coming years.
Looking ahead
Farmer shareholders have given us a strong mandate to
pursue our strategy as a global B2B dairy provider on the
basis we will be a more focused, high performing business.
The divestment allows us to return capital to our owners
and dedicate our milk, assets and innovation activities to
the areas of the business that generate the best end-to-
end value for farmers.
As we look out at the remainder of the year, we can see
we will continue to face heightened uncertainty in the
international markets.
The conflict in the Middle East is a complex and dynamic
situation that is changing daily, but we are confident that
we’re on the right track to get product to customers.
Our business is designed to manage volatility. Our scale and
strong relationships with customers and logistics provider
Kotahi will help us to navigate through these challenges
better than most.

Ngā mihi,
Peter McBride
Chairman
Miles Hurrell
Chief Executive Officer
Forecast Farmgate Milk Price range
NZ$9.40-$10.00
per kgMS
Earnings forecast
50-65 cents
per share
Profit after tax
NZ$750m
up 3%
Interim dividend, fully imputed
24 cents
per share
4
Fonterra Interim Report 2026
ContentsOur StrategyProgress Interim Financial StatementsNon-GAAP MeasuresDirectoryGlossaryChair & CEO

Kev & Beau, Waitoa
Progress
on strategy
We’re playing to our strengths
to be the source of the world’s
most valued dairy
5
*SRXIVVE -RXIVMQ 6ITSVX 2026
ContentsChair & CEOProgress Interim Financial StatementsNon-GAAP MeasuresDirectoryGlossaryOur Strategy

Our strategy
Our Purpose
Our Co-operative, empowering people, to create goodness
for generations. You, me, us together. Tātou, tātou.
The source of the world’s most valued dairy
Our Vision
Our Choices
Outcomes
Strong
Shareholder returns
Stable
balance sheet
Enduring
Co-op
Build on our
sustainability
position
Deliver the
strongest
farmer
offering
Keep
momentum in
Foodservice
Unleash our
Ingredients
engine
Invest in
operations
for the
future
Innovate to
drive our
advantage
6
Fonterra Interim Report 2026
ContentsChair & CEOProgress Interim Financial StatementsNon-GAAP MeasuresDirectoryGlossaryOur Strategy

Deliver the strongest
farmer offering
Unleash our
Ingredients engine
Keep momentum
in Foodservice
Invest in operations
for the future
Build on our
sustainability position
Innovate to drive
our advantage
–Introduced new initiatives to
support early-career farmers
–Continued to optimise
Advance Rate schedule to
support on-farm cashflows
(late 2025)
–Executing strategy through
optimal product mix and
allocating milk solids to
highest accessible demand
–MyNZMP and MyNZMP
Link digital sales channels
continuing to grow rapidly
–Focused on protecting and
accelerating the Anchor Food
Professionals brand
–Built on our successful grass-
fed dairy campaign in China
to expand into additional
Southeast Asian markets
–Completed build of
advanced protein hub at
Studholme plant
–Started build of butter line
at Clandeboye
–Edendale UHT cream
expansion on track for
completion late 2026
–Within our climate focus
area, now prioritising climate
adaptation alongside
emissions reductions
–Launched New Zealand Dairy
Grass-Fed Administrative
Standard in China
–Developed tool to speed
up formulation trials and
accelerate time-to-market
–Supported the development
of tools that lower on-farm
emissions with AgriZeroNZ
–Fonterra Research and
Development Centre is one
of the largest of its kind
in the world, and a hub
of innovation
More on page 12More on page 13More on page 14
More on page 15More on page 17More on page 18
Progress on strategy
7
Fonterra Interim Report 2026
ContentsChair & CEOOur StrategyInterim Financial StatementsNon-GAAP MeasuresDirectoryGlossaryProgress
IngredientsFoodservice
On-farmOperations SustainabilityInnovationOverview

Financial overview
Reported operating profit
$1,231m
From 1,107m
Reported profit after tax
$750m
From 729m
Reported earnings per share
45c
From 44c
Normalised earnings per share
51c
From 47c
Special Mainland Dividend
16c
Interim Dividend
24c
From 22c
Return On Capital
11.2%
From 10.4%
Smith Family, Southland
8
Fonterra Interim Report 2026
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IngredientsFoodservice
On-farmOperations SustainabilityInnovationOverview

Favourable product mix and resilient
global demand for high value dairy
Ingredients and Foodservice products
have enabled the Co-operative to deliver
an improved operating profit for the first
six months of FY26 and a fully imputed
interim dividend of 24 cents per share
from continuing operations. In addition,
a fully imputed special Mainland dividend
of 16 cents per share has been confirmed,
representing 100% of Mainland
Group’s FY26 earnings while under
Fonterra ownership.
The combination of both the fully imputed 40 cent dividend
and the tax-free $2.00 capital return, from the divestment
of Mainland Group, will mean the Co-operative distributes
$3.9 billion in cash on 14 April 2026
1
to its shareholders and
unit holders.
Total Group profit after tax was $750 million, up $21
million on the prior comparable period. Earnings per share
attributable to equity holders increased to 45 cents, up
from 44 cents in the prior period.
The Co-operative’s performance for the first six months
of FY26 includes $90m in costs related to the divestment
and separation of Mainland Group. These costs have been
considered as part of the capital return, excluding them the
Co-operative’s normalised earnings per share is 51 cents.
Net debt has reduced from $5.5 billion to $4.9 billion
reflecting working capital movements and stronger
earnings relative to the prior year.
The Co-operative’s return on capital of 11.2% is above
last year and tracking to be within FY26 target range of
10 – 12%.
Dave & Darryl, Taranaki
1 Based on the transaction completing at the end of March.
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IngredientsFoodservice
On-farmOperations SustainabilityInnovationOverview

Strong channel performance delivering
sustainable return on capital
The following section is presented as if the Mainland Group
divestment had already happened, using the methodology
prescribed in the Notice of Special Meeting Booklet
released to the NZX on 29 September 2025. The purpose
is to help understand the estimated financial impact of the
transaction on Fonterra’s financial performance for the first
six months of FY26.
1 Prepared on a pro forma basis. Pro forma historical information has been prepared as if the transaction has already occurred. (i.e. to remove the effects of existing transfer
pricing arrangements that will cease, and to recognise the impact of the agreements with the Mainland Group. The net impact is $20m (31 January 2025: $38 million).
External
sales volume
(million kgMS)
625
1.2%
141
3.7%
766
0.4%
Core
Operations
$47m
$245m
$ 174m
$199m
$221m
$45m
In-market
$513m
$65m
$198m
$1m
$711m
$66m
Tot al
$560m
$180m
$372m
$200m
$932m
$20m
Return on
Capital
11.0%12.6%11.4%
Operating Profit contribution from remaining operations (excluding Mainland)
1
IngredientsFoodserviceTot al
10
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IngredientsFoodservice
On-farmOperations SustainabilityInnovationOverview

Core Operations includes the business activities that
collect and process New Zealand milk through to selling
products to the in-market Ingredients and Foodservice
business units. Core Operations operating profit is
attributed to the channels to provide an end-to-end
view of value created from Fonterra’s Ingredients and
Foodservice businesses.
Core Operations’ operating profit of $221 million is down
$46 million on prior year mainly due to the new Enterprise
Resource Planning (ERP) system build costs and an increase
in other costs such as energy and freight.
The value of protein and fat within milk is an important
driver of the costs, and therefore earnings, attributed to
the channels.
As illustrated in the monthly milk price graph, the cost of
milk was materially higher in the first half of FY26 relative
to FY25. This was primarily driven by an increase in protein-
based Reference product prices. Therefore, a greater share
of the milk cost uplift sat in the protein component. This
reduced Core Operations’ operating profit attribution to
the protein-weighted Ingredients channel by $245 million
year on year to $47 million.
The Foodservice channel, which has a fat-weighted product
portfolio had a corresponding $174 million Core Operations
operating profit attribution, $199 million higher than the
prior year.
End-to-end channel performance
Ingredients: Operating profit $560 million, down $180
million. The channel’s in-market operating profit increased
$65 million, reflecting margin growth from better pricing
and a favourable product mix across most regions, led by
strong demand for high value functional proteins in Europe.
The in-market performance was more than offset by the
lower attribution from Core Operations.
Foodservice: Operating profit increased $200 million to
$372 million, due to the higher Core Operations attribution.
The channel’s in-market performance was in line with last
year, as improved pricing and product mix were offset by
milk cost pressures. Operating expenses were also lower as
the business integrated and right sized the Greater China
consumer business.
Michael, Southland
2024/25 season
monthly milk prices
average to $10.16, the
Farmgate Milk Price
Higher milk cost at
start of season driven
by demand for WMP
2025/26 season forecast
monthly milk prices, informing
the forecast $9.70 Farmgate
Milk Price midpoint (range
$9.40 - $10.00)
FY25
FY26
$6
$7
$8
$9
$10
$11
$12
MayAprMarFebJanDecNovOctSeptAugJulJun
FY25 and FY26 monthly milk prices
($ per kgMS)
11
Fonterra Interim Report 2026
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IngredientsFoodservice
On-farmOperations SustainabilityInnovationOverview

Our strategy is centred around growing end-to-end value
for farmers. Maintaining our scale is key to this. We know
farmers have a choice in processors, so we’re focused on
making our offering as competitive as we can. We are
maximising total payout and supporting on-farm cashflows,
providing options to gain greater Milk Price certainty,
and providing tailored support to boost productivity and
simplify compliance.
The Co-op is currently forecasting a Farmgate Milk Price
range of $9.40-$10.00 with a mid-point of $9.70 per kgMS
for the 2025/26 season, down from $10.16 last season. The
change reflects higher milk supply both within New Zealand
and globally, particularly out of the United States and
Europe, putting downward pressure on commodity prices.
We collected milk from 8,120 supplying farms across
New Zealand in the first half of the 2025/26 season. Milk
collections for the season are forecast at 1,565 million
kgMS, with 1,075 million kgMS collected as at 31 January
– up 2.5% on the prior season. Favourable early-season
weather for most regions supported pasture growth, lifting
production across the country. The South Island has been
a standout, delivering record collections for the first eight
months of the season.
After gaining more milk from competitors than was lost
last season, we continue to place a strong emphasis on
attracting new farmers. This extends to those interested
in supplying organic milk, with the Co-op’s recent
announcement to expand its successful organic business
into the South Island.
We are introducing further initiatives to support early-
career farmers. For example, new shareholders will
have greater flexibility in how they reach their minimum
shareholding requirements from next season. Other
initiatives include ‘Proud to Belong’ events for young
farmers at manufacturing sites, a new partnership with
Growing Future Farmers, and continuation of the First Farm
Award delivered in partnership with ASB.
We are also focused on retaining our existing farmers. One
way we do this is by continuing to optimise our advance
rate schedule to support on-farm cashflows, as was done in
late 2025 to minimise the impact of a softening Farmgate
Milk Price.
There are promising signs of the Co-op securing additional
milk, particularly in the South Island, and we are continuing
to explore opportunities to maintain and grow our
market share.
Deliver the
strongest farmer
offering
Work alongside farmers to help drive
on-farm productivity and profitability
Forecast milk price mid-point
$9.70per kgMS
Season to date collections
1,075m kgMS
up 2.5%
Eva & Dave, Southland
20262025202420232022
8,895
8,709
8,376
8,2358,120
166
170
176
183
193
kgMS collected (million)Average collected per farm (thousand kgMS)
Average farms
1
1,565
1,478
1,480
1,471
1,509
Forecast
Fonterra supplier base and milk collections
(Full season figures)
1 Average number of farms supplying milk for the season.
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IngredientsFoodservice
OverviewOperations SustainabilityInnovationOn-farm

Unleash our
Ingredients engine
Deepen our position as a world-leading
provider of sophisticated dairy
ingredients, to grow both the Farmgate
Mik Price and earnings
Strong milk flows in New Zealand and around the world
have created pricing volatility and changing supply
dynamics during the first half of FY26. In response, we have
leveraged our global sales network to manage demand
across regions and maximise the value of our farmers’ milk.
In line with the Co-op’s strategy, we have continued to
focus on optimising our product mix by allocating milk
solids effectively to the highest accessible demand. With
milk collection tracking at 2.3% growth year-on-year,
we have leveraged flexibility in our asset network and
increased the manufacture of our highest returning product
portfolios, such as cheese and proteins.
We continue to work closely with customers. Our MyNZMP
and MyNZMP Link digital sales channels continue to grow
rapidly, supporting a world-class customer experience, and
our contracted sales book means we are well placed for the
second half of the fiscal year.
The US ready-to-drink (RTD) market continued to perform
strongly this half, with an annualised growth rate of 10%.
Momentum in high-protein yoghurts is even stronger,
with 20g+ protein formats growing 65% year-on-year,
contributing to 4.5% category growth overall. Similar
dynamics are emerging in Europe, supported by a continued
consumer focus on health and wellness nutrition.
Alongside protein, cheese has been a standout this half,
driven by our product quality and grass-fed credentials,
with demand growth across all major regions.
Through close collaboration with market leading customers,
we are increasing share in our targeted, high growth
segments that support key growth for our customers and
end-to-end value for our farmers’ milk.
20262025202420232022
% of total milk solids manufactured
222
206
217
229
213
22.6%
24.0%
22.2%22.6%
23.3%
NZ milk solids manufactured (kgMS millions)
Advanced & specialty
1
Cheese, casein, other proteins
1 Subset of Advanced and Specialty, presenting the higher value portfolios
13
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Foodservice
On-farmOverviewOperations SustainabilityInnovation
Ingredients

The Foodservice channel is focused on building one global
team and simplifying how we deliver growth, volume and
product mix across Greater China and Southeast Asia.
This approach centres on protecting and accelerating the
Anchor Food Professionals (AFP) brand and delivering
consistent execution across markets.
This year, we have continued to build on the successful
grass-fed dairy campaign launched in China. Reinforced by
the New Zealand Dairy Grass-Fed Administrative Standard
we have strengthened our premium positioning, and this
approach is now being extended to additional Southeast
Asian markets.
Diversifying our cream portfolio and expanding our
customer base remains a key focus. Anchor Easy Bakery
Cream continues to perform strongly in China, valued
for its functionality, quality and accessible price point. Its
success demonstrates how differentiated solutions can
drive growth across markets. The cream has now launched
in Indonesia and Thailand, with other markets across
Southeast Asia to follow.
Keep momentum
in Foodservice
Expand our successful Foodservice
business in and beyond China to
grow earnings
20262025202420232022
NZ milk solids shipped (kgMS millions)
% of total milk solids shipped
76
88
97
100
74
10.3%
9.8%
11.3%
12.6%
13.0%
Foodservice
Greater China, Southeast Asia
Case study: Vietnam – Driving growth
through dairy upgrade
Vietnam’s dynamic culinary culture presents strong
growth potential as tourism and demographic
trends increase openness to new flavours. In
Bakery, AFP chefs show how cream blending
enhances flavour in premium products. In Dining,
AFP cream is incorporated into desserts, soups
and savoury dishes, adding richness and nutrition.
Our localised approach builds on findings from
China, where dairy cream usage in bakery grew from
~10% in 2013 to ~40% today.
14
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Ingredients
On-farmOverviewOperations SustainabilityInnovation
Foodservice

Fonterra experienced high milk production this season,
with our teams processing near record volumes of milk
at many plants. Our teams have responded well to the
additional pressure on our supply chain, manufacturing,
and storage facilities by closely monitoring product mix,
asset performance, and inventory to support efficient
processing of milk.
We have also experienced several significant weather
events this season, which have impacted some farmers and
operations across the country. Our planning and dispatch
and tanker teams worked tirelessly during these events to
keep collecting milk.
When the Co-operative released its refreshed strategy in
September 2024, it published key business drivers with
targets for FY26 and FY27, including efficiency metrics -
cash operating expenses of $1.12 per kgMS (post Mainland
divestment level) and New Zealand manufacturing cash
costs of $2.62 per kgMS for FY26. Cash operating expenses
per kgMS are currently forecast at $0.98, meaning the
Co -op is tracking ahead of the FY26 strategic target,
reflecting continued cost discipline through the year.
New Zealand manufacturing cash costs per kgMS are
forecast at $2.73 compared to the FY26 strategic target
of $2.62, driven by higher input costs including lactose
and additional secondary processing costs, partially offset
by higher milk solids collections and ongoing efficiency
gains. The Co-operative is reviewing its approach to lifting
manufacturing cost performance as it works back toward
the strategic targets.
Invest in
operations for
the future
An efficient manufacturing and supply
chain network that allows us to flexibly
allocate milk to the highest returning
product and sales channel
Katie & Campbell, Edendale
202720262025202420232022
2.3
2.63
2.58
2.66
2.73
2.64
ForecastStrategic
targets
Core Operations manufacturing cash costs
Cash operating expenses per kgMS
Cash operating expenses per kgMS (exc. ERP build & Mainland Group)
1.17
1.3
1.36
1.47
1.43
1.010.98
1.05
Efficiency metrics
(Full financial year figures)
Enterprise Resource Planning (ERP)
Transformation Update
We continue to make good progress with our ERP
Transformation project, with one market and two
New Zealand manufacturing sites now live. The five-
year programme remains on track to wrap up in late
2028, with spend peaking in FY26 and FY27. The update
will help future-proof the Co-op’s critical processes and
systems and reduce cash costs over time.
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IngredientsFoodservice
On-farmOverviewSustainabilityInnovationOperations

During the half, we continued to invest in our assets to drive
growth in our Foodservice and Ingredients businesses, and
in projects intended to improve energy security, operational
resilience, and reduce the Co-op’s emissions.
We have completed construction of our $75 million
advanced protein hub at Studholme, with the first sample
products coming off the line in February. In January,
we commenced building our $75 million butter line at
Clandeboye, which will help us meet Ingredients and
Foodservice demand for our various butter formats. At
Edendale, the $150 million UHT cream expansion is nearly
complete, with first products expected in the second half
of 2026.
We are also making good progress on our decarbonisation
and energy security projects. In Whareroa and Edgecumbe,
new electric boiler installations are on track for
commissioning in the middle of this year, and Edendale’s
upgrade is targeted for completion in mid-2027. In Waitoa,
installation of the Co-op’s first resistive element boilers
is now complete. Combined, these projects are expected
to reduce the Co-op’s emissions by around 96,000
tonnes per year.
Steve, Edendale
Capital invested
Full financial year figures ($ million)
202720262025202420232022
Other capital invested
Growth capital expenditure
PlannedStrategic
targets
Essential capital expenditure
53
30
617
47
79
747
56
106
720
~1,000
980
25%
10%
534621558
167
128
930
635
65%
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IngredientsFoodservice
On-farmOverviewInnovationOperations Sustainability

The Co-op has recently reaffirmed the importance
of our strategic choice to build on our sustainability
position. We remain focused on climate, nature, and
animal wellbeing, while creating sustainable long-
term value. Within the climate focus area, we are
now prioritising climate adaptation alongside emissions
reductions, recognising the growing risks and opportunities
that climate change brings.
We are assessing potential climate-related risks to milk
supply and our operations, and building on existing work
that supports adaptation and long-term resilience. For
example, the Co-op has joined the Resilient Pastures
programme, a seven year initiative led by DairyNZ and the
Ministry for Primary Industries. This programme aims to
understand future climate conditions and actions that
improve pasture resilience.
In parallel, we continue to work toward the emissions
reduction targets outlined in our Climate Roadmap
including our ambition to be net zero by 2050 and our
2030 targets: reducing absolute Scope 1 and 2 emissions
by 50.4% and on-farm emissions intensity by 30% from an
FY18 baseline.
Progress will not be linear, as we navigate seasonal
conditions, technology readiness and on-farm adoption.
For example, higher than forecast milk volumes in Q1 have
influenced our FY26 target achievement.
Recently, we launched the Carbon Removals Tool, which
uses remote sensing and AI to map vegetation on farms,
and allows farmers to be recognised for the positive impact
their farm planting has in reducing emissions.
We will also make our first Customer Emissions Incentive
payments to farmers in October 2026. This is paid to
farmers who achieve the Co-operative Difference and have
one of the lowest emissions footprints in the Co-op*.
Over the past six months, we have launched a second round
of applications for our customer-funded On-Farm Solutions
programme for 2025/26, and continue to partner with
the New Zealand Government and industry on innovative
agricultural emissions solutions via AgriZeroNZ. We’re also
partnering with DairyNZ on Low N Systems and other
projects to reduce nitrogen losses and emissions.
Build on our
sustainability
position
Further improve the Co-op’s sustainability
credentials, as we work towards our
ambition to be net zero by 2050
Matt & Adam, Taranaki
* To receive the payment, farmers need to achieve the Co-operative Difference
and have one of the lowest emissions footprints in the Co-op (around 30% lower
than the average farm). This takes into account not only emissions from farming
activities, but also those associated with land use change (e.g. the historical
conversion of forests to pasture) and those released from peat soils, before
subtracting any carbon removals.
** Calculated on an ‘as consumed’ basis and averaged over the previous three seasons
data. Grass-fed means cows mainly grazing on grass and crops in paddocks where
they roam. Visit fonterra.com/grass-fed for more information.
In June 2025, we marked an important milestone
with the launch of the New Zealand Dairy Grass-Fed
Administrative Standard in China alongside Prime
Minister Christopher Luxon. Fonterra’s data exceeds
the standard, with our farmers’ cows spending
more than 350 days on pasture and averaging 96%
grass-fed**. This provides greater assurance and
credibility for our grass-fed claim in key markets and
supports long-term value for the Co-op.
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IngredientsFoodservice
On-farmOverviewOperations InnovationSustainability

In line with our strategy, the Co-op has continued to
advance its innovation pipeline across products, processes,
data and new business models. Our team and dedicated
research and development centre remains focused on core
dairy and advanced nutrition, manufacturing performance
and capability, and strengthening in-market application
capability to support long-term growth, efficiency
and resilience.
We are using digital tools to bring products to customers
faster and improve operational efficiencies. Dairy
modelling, a predictive formulation tool, reduces trial work
and accelerates time-to-market. Forecasts show it can
improve the likelihood of achieving 12-month shelf-life
performance for high-protein beverage development by
3.5x, while reducing formulation trials by approximately
70% and supporting functional whey capacity.
In addition, we piloted AFP ASCEND, a purpose-built AI-
enabled platform, that combines internal data with external
market insights to enable cross-sell campaigns for the
Co-op’s Foodservice business. With pilot markets seeing up
to an 8% increase in sales value, our focus now is to expand
its rollout to Southeast Asia and enhance it for new store
growth. Eventually, AFP ASCEND can be utilised in our
Global Ingredients and Farm Source Retail businesses to
improve cross-sell campaigns.
The Ki Tua Fund, our Co-op’s corporate venture capital
arm, has invested in Swan Genomics, an early-stage
DNA sequencing company using plasmonic nanoantenna
technology to read DNA more efficiently and at lower cost.
Whole genome sequencing is critical to the Co-op’s current
and future needs for food assurance, and the development
of starter, and adjunct cultures for fermented products
such as cheese, yoghurt, cream cheese and lactic casein.
Through AgriZeroNZ, we support the development of tools
that lower on-farm emissions. Investment momentum
has continued, with 14 ventures and research projects
underway across methane inhibitors, feed additives, animal
health and on-farm technologies. Several initiatives moved
into on-farm trials and commercial readiness testing
through Q4 FY25 and Q1 FY26.
Innovate to drive
our advantage
Use science and technology to solve
the Co-op’s challenges and build on
our competitive advantages
Yiying & Olivia, FRDC
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On-farmOverviewOperations SustainabilityInnovation

Michael & Kimberly, Southland
Independent Auditor’s Review Report20
Statement of Financial Position22
Statement of Profit or Loss
and Other Comprehensive Income23
Statement of Cash Flows 24
Statement of Changes in Equity25
Basis of Preparation26
Notes to the Interim Financial Statements 28
Interim
Financial
Statements
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Basis for conclusion
We conducted our review of the interim consolidated financial statements in accordance with NZ SRE
2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410 (Revised)). Our responsibilities are further described in the Auditor’s responsibilities for the
review of the interim consolidated financial statements section of our report.
We are independent of Fonterra Co-operative Group Limited in accordance with the relevant ethical
requirements in New Zealand relating to the audit of the annual financial statements and we have fulfilled
our other ethical responsibilities in accordance with these ethical requirements.
Our firm has provided other services to the Group that are related to our role as the Group’s auditor, such
as assurance and agreed upon procedures services. We also provided assurance over the compilation of
proforma information in the Notice of Meeting to shareholders. Subject to certain restrictions, partners
and employees of our firm may also deal with the Group on normal terms within the ordinary course of
trading activities of the business of the Group. These matters have not impaired our independence as
auditor of the Group. The firm has no other relationship with, or interest in, the Group.
Use of this Independent Auditor’s Review Report
This report is made solely to the shareholders. 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 Auditor’s
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 for our review work, this report, or any of the
conclusions we have formed.
Responsibilities of the Directors for the interim consolidated financial statements
The Directors on behalf of the Company are responsible for:
–the preparation and fair presentation of the interim consolidated financial statements in accordance
with NZ IAS 34 and IAS 34; and
–such internal control a Directors determine is necessary to enable the preparation of interim
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
Independent Auditor’s Review Report
To the shareholders of Fonterra Co-operative Group Limited
Report on the interim consolidated financial statements
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim
consolidated financial statements on pages 22 to 38 do not:
–present fairly, in all material respects, the Group’s financial position as at 31 January 2026 and its
financial performance and cash flows for the six month period then ended; and
–comply with New Zealand Equivalent to International Accounting Standard 34 Interim Financial
Reporting (NZ IAS 34) issued by the New Zealand Accounting Standards Board and IAS 34 Interim
Financial Reporting (IAS 34) as issued by the International Accounting Standards Board.
We have completed a review of the accompanying interim consolidated financial statements
which comprise:
–the interim consolidated statement of financial position as at 31 January 2026;
–the interim consolidated statements of profit or loss and other comprehensive income, cash flows
and changes in equity for the six month period then ended; and
–notes, including material accounting policy information.
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Independent Auditor’s Review Report continued
Auditor’s responsibilities for the review of the interim consolidated financial
statements
Our responsibility is to express a conclusion on the interim consolidated financial statements based on
our review.
NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our attention that causes
us to believe that the interim consolidated financial statements, taken as a whole, are not prepared, in all
material respects, in accordance with NZ IAS 34 and IAS 34.
A review of the interim consolidated financial statements in accordance with NZ SRE 2410 (Revised)
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.
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) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion on the interim consolidated financial statements.
The engagement partner on the review resulting in this independent auditor’s review report is
Aaron Woolsey.
For and on behalf of:
KPMG
Auckland
22 March 2026
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NOTES
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
31 JUL 2025
1
AUDITED
ASSETS
Current assets
Cash and cash equivalents117218309
Trade and other receivables 1,9122,4991,462
Inventories6,6827,9904,204
Derivative financial instruments 588247294
Other assets 9610973
Assets held for sale24,365–3,815
Total current assets13,76011,06310,157
Non-current assets
Inventories515968
Property, plant and equipment55,6616,3945,595
Intangible assets7871,779818
Deferred tax assets86205113
Derivative financial instruments257386364
Other assets 5481462411
Total non-current assets7,3239,2857,369
Tot al a s s e t s21,08320,34817,526
Statement of Financial Position
AS AT 31 JANUARY
($ MILLION)
NOTES
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
31 JUL 2025
1
AUDITED
LIABILITIES
Current liabilities
Bank overdraft6514930
Borrowings51,1441,644470
Trade and other payables 55,0905,0314,187
Tax payable289322391
Derivative financial instruments134663157
Other liabilities86136149
Liabilities held for sale21,018–969
Total current liabilities 7,8267,9456,353
Non-current liabilities
Borrowings54,1154,1632,668
Derivative financial instruments 5213265
Deferred tax liabilities2453234
Other liabilities597862
Total non-current liabilities 4,4714,4052,829
Total liabilities12,29712,3509,182
Net assets8,7867,9988,344
EQUITY
Subscribed equity45,0645,0645,064
Retained earnings3,1683,0313,007
Foreign currency translation reserve222186158
Hedge reserves226(375)11
Other reserves261011
Non-controlling interests808293
Total equity8,7867,9988,344
1 Comparative information includes re-presentations for consistency with the current period.
The Board approved and authorised for issue these Interim Financial Statements on 22 March 2026.
For and on behalf of the Board:
Peter McBride Bruce Hassall
Chairman Director
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Statement of Profit or Loss and Other Comprehensive Income
FOR THE SIX MONTHS ENDED 31 JANUARY
($ MILLION)
NOTES
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Revenue from sale of goods112,46411,400
Cost of goods sold
New Zealand sourced cost of milk(9,839)(9,805)
Other collection and manufacturing costs(3,219)(3,173)
Increase in inventories2,4783,347
Total cost of goods sold
2
3(10,580)(9,631)
Gross profit1,8841,769
Other operating income4258
Foreign exchange gains414
Operating expenses3(880)(858)
Net finance costs(87)(84)
Profit before tax from continuing operations963899
Tax expense(263)(241)
Profit after tax from continuing operations700658
Profit after tax from discontinued operations25071
Profit after tax750729
Cash flow hedges and other costs of hedging, net of tax215(303)
Net investment hedges and translation of foreign operations, net of tax5559
Foreign currency translation reserve losses transferred to profit or loss9–
Other movements in reserves–(15)
Total items that may be reclassified subsequently to profit or loss279(259)
Total items that will not be reclassified subsequently to profit or loss18
Total other comprehensive income/(expense)280(251)
Total comprehensive income1,030478
Earnings per share attributed to equity holders of the Co-operative
Basic and diluted earnings per share from continuing operations ($)0.420.40
Basic and diluted earnings per share from discontinued operations ($)0.030.04
Total basic and diluted earnings per share ($)0.450.44
1 Comparative information includes re-presentations for consistency with the current period.
2 This Statement is presented on a functional basis. The shaded information provides an additional breakdown of Cost of goods sold by nature of expense.
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Statement of Cash Flows
FOR THE SIX MONTHS ENDED 31 JANUARY
($ MILLION)
The Statement of Cash Flows presents total Group cash flows including continuing and discontinued operations.
NOTES
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
Cash flows from operating activities
Profit after tax750729
Adjustments for:
Net finance costs8885
Tax expense393293
Depreciation and amortisation259317
Gain on sale of businesses(8)(8)
Foreign exchange losses83136
Other16(3)
Total adjustments831820
Increase in working capital and other operating activities5(2,370)(3,319)
Net taxes paid(407)(54)
Net cash flows from operating activities(1,196)(1,824)
Cash flows from investing activities
Acquisition of property, plant and equipment (312)(241)
Acquisition of intangible assets(63)(16)
Acquisition of investments(24)(15)
Other cash inflows5127
Net cash flows from investing activities(348)(245)
NOTES
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
Cash flows from financing activities
Proceeds from borrowings3,9794,792
Repayment of borrowings(1,874)(2,409)
Dividends paid(588)(661)
Interest paid(105)(93)
Net cash flows from financing activities1,4121,629
Net decrease in cash(132)(440)
Opening cash 373498
Effect of exchange rate changes(6)11
Closing cash 23569
Reconciliation of closing cash to the Statement of
Financial Position
Cash and cash equivalents117218
Bank overdraft(65)(149)
Cash balances included in assets and liabilities held for sale2a183–
Closing cash23569
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Statement of Changes in Equity
FOR THE SIX MONTHS ENDED 31 JANUARY
($ MILLION)
ATTRIBUTABLE TO EQUITY HOLDERS OF THE CO-OPERATIVE
SUBSCRIBED
EQUITY
RE TAINED
EARNINGS
1
FOREIGN
CURRENCY
TRANSLATION
RESERVEHEDGE RESERVESOTHER RESERVES
NON-
CONTROLLING
INTERESTS
TOTAL
EQUITY
As at 1 August 20255,0643,0071581111938,344
Profit after tax–730–––20750
Other comprehensive income/(expense)––642159(8)280
Total comprehensive income–730642159121,030
Transfer between reserves–(6)––6––
Transactions with equity holders:
Dividends paid–(563)–––(25)(588)
As at 31 January 2026 (unaudited)5,0643,16822222626808,786
As at 1 August 20245,0642,966127(72)20768,181
Profit after tax–708–––21729
Other comprehensive income/(expense)––59(303)(10)3(251)
Total comprehensive income–70859(303)(10)24478
Transactions with equity holders:
Dividends paid–(643)–––(18)(661)
As at 31 January 2025 (unaudited)5,0643,031186(375)10827,998
1 Comparative information includes re-presentations for consistency with the current period.
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Basis of Preparation
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
AT A GLANCE
The basis of preparation describes changes in material accounting policies and significant
judgements and estimates, in addition to providing explanatory comments on the seasonality of
Fonterra’s operations.
a) General information
Fonterra Co-operative Group Limited (Fonterra, the Company or the Co-operative) 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 (DIRA).
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 2025.
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 for the Statement of Financial Position and associated Notes to the Interim
Financial Statements has been presented in these Interim Financial Statements.
Re-presentations
At 31 January 2026 and 31 July 2025, the Group’s Consumer and associated businesses were classified as
a disposal group held for sale and considered to be a discontinued operation:
–Discontinued operations are presented in a single line item in the Statement of Profit and Loss and
Other Comprehensive Income in the current and comparative reporting periods. Comparative period
information has been re-presented to reflect the classification of the Consumer and associated
businesses as a discontinued operation.
Refer to Note 2 Divestments and Note 6 Re-presentations for further information.
–The Consumer and associated businesses were classified as a disposal group held for sale at 31 July
2025. Associated amounts are presented in assets held for sale and liabilities held for sale in the
Statement of Financial Position at 31 January 2026 and 31 July 2025, and comparative amounts at
31 January 2025 have not been re-presented.
In Note 3 Expenses, for consistency with the current period’s treatment:
–The 31 January 2025 comparative amounts for Other ingredient purchases and manufacturing costs,
and Energy costs have increased/decreased by $68 million respectively; and
–The 31 January 2025 comparative amounts for Non-New Zealand sourced cost of milk of $21 million
related to domestic third party milk purchases and has been aggregated into New Zealand cost of milk.
In Note 5e) Borrowings, for consistency with the current period’s treatment, the 31 July 2025 comparative
amounts for proceeds and repayments have each increased by $300 million (to include movements on a
facility within the year).
An overstated prior period accrual has been released and opening Retained earnings at 1 August 2024 has
increased by $6 million, and Trade and other payables at 31 January 2025 and 31 July 2025 has decreased
by $6 million.
In addition, at each balance date the Group reassesses the aggregation and disaggregation of individual
line items (and comparative information has been re-presented for consistency with the current period).
Within Note 5f) Net movement in working capital and other operating activities, Derivatives movements
has been disaggregated from Trade and other receivables movements (31 January 2025: $212 million).
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 2025.
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, consistent with those disclosed in the Group’s
Financial Statements for the year ended 31 July 2025.
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Basis of Preparation continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
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 2026
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 2026 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
2026 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.
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Notes to the Interim Financial Statements
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
NOTEPAGE
1Segment reporting and revenue 29
2Divestments 32
3Expenses 34
4Subscribed equity instruments 35
5Other disclosures 36
6Re-presentations 38
Te Wehi & Tomika, Bay of Plenty
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
1 Segment reporting and revenue
AT A GLANCE
This note provides information on the Group’s organisational structure and segment performance,
from continuing operations, together with information on the Group’s external revenue. The
Group’s reportable segments are the Ingredients and Foodservice channels and Core Operations
(excluding the Consumer and associated businesses).
Segment information provided in this note reflects the Group’s performance from continuing operations
only. The Consumer and associated businesses are considered a discontinued operation and have been
excluded from the disclosures in this note. Please see Note 2 Divestments for further information about
the Group’s discontinued operations.
Effective 1 August 2025, Fonterra implemented changes to the Fonterra Management Team (FMT) aligned
with a channel-led structure. Two new FMT roles were created to lead the Group’s global Ingredients
and Foodservice businesses, the President Global Ingredients and the President Global Foodservice. The
President Global Ingredients replaces the President Global Markets - Ingredients FMT role.
Operating segments reflect the way financial information is regularly reviewed by the FMT. The FMT is
considered to be the Chief Operating Decision Maker (CODM). At 31 January 2026, the FMT consists
of the Group’s Chief Executive Officer (CEO), Chief Financial Officer, Chief Operating Officer, the
President Global Ingredients, the President Global Foodservice (who is also the CEO Greater China), the
Chief Innovation and Brand Officer, the Managing Director People and Culture, the Managing Director
Co-operative Affairs and the Managing Director M&A and Strategic Divestments.
The measure of profit or loss used by the FMT to evaluate the underlying performance of operating
segments is earnings before interest and tax (EBIT).
The Group’s operating model and the way financial information is presented to the FMT (and used to make
decisions about resource allocations and assess performance) forms the basis for the Group’s operating
segments. This is evolving, and currently based around the two channels, Ingredients and Foodservice.
At 31 January 2026, the Group has determined that its reportable segments are the Ingredients and
Foodservice channels, and Core Operations separately (comparative information within this note has been
restated to reflect the change in the Group’s reportable segments).
Core Operations comprises:
–Core operating functions which includes New Zealand milk collection, processing operations and assets,
and Supply Chain;
–Farm Source™ retail stores; and
–The Central Portfolio Management function (CPM) which manages the physical and financial
commodity portfolios including optimising the New Zealand milk pool, product pricing support for the
regions, managing Fonterra’s dairy and non-dairy price risk and providing price risk management tools
to both our customers and farmer shareholders.
The way financial information is presented to the FMT and used to make decisions is expected to change
in the near future, with the performance of Core Operations attributed to each of the channels. This may
result in a reassessment of the Group’s reportable segments at 31 July 2026.
REPORTABLE SEGMENTSDESCRIPTION
IngredientsRepresents the global Ingredients channel.
FoodserviceRepresents the global Foodservice channel, and residual Consumer channel.
Core OperationsRepresents core operating functions, Fonterra Farm Source™ retail stores
and CPM.
Corporate Services costs including Innovation and Brand, Group IT and Co-operative Affairs are allocated
to Ingredients, Foodservice and Core Operations.
The performance of the Group’s reportable segments includes transactions between the segments for
the purchase and sale of goods, which are eliminated at the total Group level. Transactions between
Core Operations and the other reportable segments are based on transfer pricing that is indexed where
possible to observable market pricing (such as Global Dairy Trade prices). For products with specifications
that vary from those with observable market pricing, incremental manufacturing and service costs are
included in the transfer price.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
1 Segment reporting and revenue continued
External revenue presented in the following tables is determined in accordance with the accounting policy, estimates and judgements consistent with those disclosed in the Group’s Financial Statements for the year
ended 31 July 2025.
Core Operations includes external revenue together with adjustments to reflect that it acts as an agent for other segments, and the volatility associated with the Group’s sales hedging activities.
CONTINUING OPERATIONS
SIX MONTHS ENDED 31 JANUARY 2026 (UNAUDITED)
INGREDIENTSFOODSERVICE
CORE
OPERATIONSELIMINATIONSTOTAL
Revenue from sale of goods9,4782,60810,411(10,189)12,308
Cost of goods sold(8,789)(2,229)(9,733)10,189(10,562)
Gross profit689379678–1,746
Operating expenses(229)(188)(463)–(880)
Other
1
3376–46
Normalised segment EBIT493198221–912
Add normalisation adjustment
2
138
Continuing operations EBIT493198221–1,050
Other segment information:
–External revenue8,5522,57723–11,152
–Inter-segment revenue163410,022(10,189)–
–Revenue from discontinued operations91927366–1,312
Continuing operations revenue9,6342,60810,411(10,189)12,464
–Depreciation and amortisation(24)(14)(218)–(256)
–Share of profit of equity accounted investees 11–2–13
1 Comprises other operating income (inclusive of the share of profit of equity accounted investees) and foreign exchange gains/(losses).
2 Trade terms for sales and purchases between the Group and the ‘Consumer and associated businesses’ will change following the divestment. The pricing elements relating to trade terms which are not expected to continue following the divestment have been
normalised, and excluded from segment results in this table.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
1 Segment reporting and revenue continued
CONTINUING OPERATIONS
SIX MONTHS ENDED 31 JANUARY 2025 (UNAUDITED AND RESTATED)
3

INGREDIENTSFOODSERVICE
CORE
OPERATIONSELIMINATIONSTOTAL
Revenue from sale of goods8,7792,4429,448(9,390)11,279
Cost of goods sold(8,180)(2,057)(8,772)9,390(9,619)
Gross profit599385676–1,660
Operating expenses(223)(194)(441)–(858)
Other
1
34632–72
Normalised segment EBIT410197267–874
Add normalisation adjustment
2
109
Continuing operations EBIT410197267–983
Other segment information:
–External revenue7,8552,336(62)–10,129
–Inter-segment revenue126779,187(9,390)–
–Revenue from discontinued operations91929323–1,271
Continuing operations revenue8,9002,4429,448(9,390)11,400
–Depreciation and amortisation(23)(14)(225)–(262)
–Share of profit of equity accounted investees 6–1–7
1 Comprises other operating income (inclusive of the share of profit of equity accounted investees) and foreign exchange gains/(losses).
2 Trade terms for sales and purchases between the Group and the ‘Consumer and associated businesses’ will change following the divestment. The pricing elements relating to trade terms which are not expected to continue following the divestment have been
normalised, and excluded from segment results in this table.
3 Comparative information includes re-presentations for consistency with the current period.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
2 Divestments
AT A GLANCE
This note provides information on components of the Group that have been divested or are held
for sale, and discontinued operations.
In August 2025 the Group announced it had agreed to sell the Group’s global Consumer business
(excluding Greater China) and Consumer brands, and the integrated businesses in Oceania and Sri Lanka
to B.S.A. SAS (Lactalis) for $4.22 billion. The sale also includes the Middle East and Africa Foodservice
business, and the Bega licences held by Fonterra’s Australian business.
At 31 January 2026, the Consumer and associated businesses continued to meet the criteria to be
classified as held for sale and as a discontinued operation (31 July 2025: the Consumer and associated
businesses under negotiation, excluding the Middle East and Africa Foodservice business and the Saudi
Arabia Consumer business). There were no businesses recognised as held for sale at 31 January 2025.
The sale became unconditional on 6 March 2026, and is expected to be completed on 31 March 2026.
Final cash proceeds remain subject to customary adjustments.
In association with the sale, a capital return of approximately $3.20 billion (approximately $2 per share)
was approved by shareholders on 19 February 2026, and is expected to be paid to shareholders in April
2026. The balance of sales proceeds will be used to retire debt or applied as working capital.
a) Disposal groups held for sale and divestments
The major classes of assets and liabilities held for sale are presented in the following table.
ASSETS AND LIABILITIES HELD FOR SALE
31 JAN 2026
UNAUDITED
31 JUL 2025
AUDITED
Cash and cash equivalents18394
Trade receivables694599
Inventory1,248986
Property, plant and equipment1,1351,071
Intangible assets977916
Deferred tax assets8487
Other assets4462
Total assets held for sale4,3653,815
Borrowings101104
Trade and other payables708593
Deferred tax liabilities123164
Other liabilities86108
Total liabilities held for sale1,018969
Net assets held for sale3,3472,846
At 31 January 2026 the Consumer and associated businesses continued to meet the criteria to be
classified as held for sale as they are available for immediate sale, and the sale is highly probable. The
amounts presented as held for sale at 31 January 2026 reflect the agreed sale perimeter, and at 31 July
2025 reflected the Consumer and associated businesses under negotiation at that date (which excluded
the Middle East and Africa Foodservice business and the Saudi Arabia Consumer business).
At 31 January 2026, the foreign currency translation reserve attributable to the Consumer and associated
businesses was a credit balance of $205 million, which will be reclassified to profit or loss on completion of
the sale (31 July 2025: $122 million).
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
b) Discontinued operations
During the six months ended 31 January 2026, the financial performance of the Consumer and associated
businesses (including the Middle East and Africa Foodservice business) was recognised in profit after tax
from discontinued operations, and comparatives have been re-presented on a consistent basis. Refer to
Note 6 Re-presentations for further information.
The summarised financial performance recognised in profit after tax from discontinued operations is
presented in the following table.
DISCONTINUED OPERATIONS
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
Revenue of discontinued operations3,1472,840
Elimination of intra-group revenue:
–Ongoing sales to continuing operations(381)(377)
–Ongoing sales to discontinued operations(1,312)(1,271)
Revenue presented in discontinued operations1,4541,192
Cost of goods sold of discontinued operations(2,637)(2,381)
Elimination of intra-group purchases:
–Ongoing purchases from continuing operations1,3121,271
–Ongoing purchases from discontinued operations381377
Cost of goods sold presented in discontinued operations(944)(733)
Gross profit510459
Other operating income2115
Operating expenses
1
(350)(350)
Net finance costs(1)(1)
Profit before tax from discontinued operations180123
Tax expense(130)(52)
Profit after tax from discontinued operations5071
1 Includes the Consumer and associated businesses divestment transaction costs of $36 million (31 January 2025: $40 million).
2 Divestments continued
The profit after tax from discontinued operations is attributable to equity holders of the Co-operative.
The discontinued operations net increase in cash generated for the six months ended 31 January 2026
was $87 million. This comprises net cash inflow from operating activities of $60 million, net cash outflow
from investing activities of $19 million, and net cash inflow from financing activities of $46 million.
On an ongoing basis, the Group continues to sell and purchase product to and from the Consumer and
associated businesses presented in discontinued operations. Intra-group transactions between continuing
and discontinued operations have been fully eliminated in the consolidated results: i) the amounts
presented in continuing operations presents the continuance of these transactions; and ii) management
has presented all eliminations within discontinued operations. The presentation of eliminations in the
table above reflects the application of the Basis of Consolidation elimination principles set out in the
Basis of Preparation of the Financial Statements for the year ended 31 July 2025. However, the results of
discontinued operations do not reflect the revenue and cost of goods sold that would be presented in
stand alone financial statements of those businesses.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
3 Expenses
AT A GLANCE
This note provides information on expenses and cost of goods sold by function that have been
included in profit before tax from continuing operations (unless otherwise stated), together with
additional information on expenses by nature.
a) Expenses by function
31 JAN 2026
UNAUDITED
31 JAN 2025
1

UNAUDITED
Cost of goods sold 10,580 9,631
Administrative expenses 460 411
Selling and marketing expenses 149 173
Distribution expenses 128 132
Other operating expenses 143 142
Operating expenses 880 858
b) Expenses by nature
COST OF GOODS SOLD
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
New Zealand sourced cost of milk9,8399,805
Other ingredient purchases and manufacturing costs1,7571,723
Employee benefits expense 542 538
Energy costs 328 324
Packaging 206 218
Storage and distribution 207 188
Depreciation and amortisation 179 182
Total other collection and manufacturing costs 3,219 3,173
Increase in inventories (2,478) (3,347)
Total cost of goods sold10,580 9,631
OPERATING EXPENSES
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Employee benefits expense 409 389
Storage and distribution 68 64
Advertising and promotion 31 45
Information technology 113 97
Professional fees 73 74
Depreciation and amortisation 77 80
Enterprise Resource Planning system replacement7953
Other3056
Total operating expenses 880 858
1 Comparative information includes re-presentations for consistency with the current period.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
4 Subscribed equity instruments
AT A GLANCE
This note provides information on the Group’s capital structure, including shares of the Co-operative and Units of the Fonterra Shareholders’ Fund.
a) Co-operative shares, including shares held within the Group
A reconciliation of movements in shares of the Co-operative is presented in the following table.
SHARES$ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
31 JUL 2025
AUDITED
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
31 JUL 2025
AUDITED
Co-operative shares on issue at beginning and end of period 1,609,190,555 1,609,190,555 1,609,190,555 5,078 5,078 5,078
Treasury shares at beginning and end of period (5,000,000) (5,000,000) (5,000,000) (14) (14) (14)
Co-operative shares on issue, excluding treasury shares 1,604,190,555 1,604,190,555 1,604,190,555 5,064 5,064 5,064
b) Units in the Fonterra Shareholders’ Fund
There are 107,410,984 units on issue at 31 January 2026 (31 January 2025: 107,410,984 units, 31 July 2025: 107,410,984 units).
c) Capital return
In association with the Consumer and associated businesses sale, on 19 February 2026 shareholders voted to pass a resolution to approve a scheme of arrangement for the Co-operative’s return of approximately
$3.2 billion of capital to shareholders (the Scheme). Final Court orders sanctioning the Scheme were made on 11 March 2026, and the Scheme will be implemented on 10 April 2026. The payment to shareholders is
expected to be made in April 2026. Shares held by Fonterra Farmer Custodian Limited (as Custodian for the Fund) are also subject to the Scheme. The payment will be made to the Custodian for direct distribution to
unit holders on the same date.
The capital return will be recognised as a reduction in subscribed equity, and has not been recognised in these Interim Financial Statements.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
5 Other disclosures
AT A GLANCE
This note provides further information on other matters related to the Group’s interim reporting.
a) Property, plant and equipment
Additions of $286 million (31 January 2025: $221 million, 31 July 2025: $746 million) were recognised
during the period.
As at 31 January 2026 the Group was committed to spend $344 million (31 January 2025: $400 million,
31 July 2025: $325 million), primarily related to buildings, plant, vehicles and equipment, software.
b) Equity accounted investees
The Group has provided funding of $50 million to the AgriZero
NZ
joint venture at 31 January 2026
(31 January 2025: $31 million, 31 July 2025: $31 million).
c) Ki Tua Fund investments
At 31 January 2026 Ki Tua Fund investments included within Other non-current assets were $69 million
(31 January 2025: $74 million, 31 July 2025: $64 million).
d) Owing to suppliers
At 31 January 2026 Owing to suppliers, included within Trade and other payables, was $3,074 million
(31 January 2025: $2,461 million, 31 July 2025: $1,820 million).
e) Borrowings
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
31 JUL 2025
1
AUDITED
Total current borrowings 1,144 1,644 470
Total non-current borrowings 4,115 4,163 2,668
Total borrowings 5,259 5,807 3,138
Opening balance 3,138 3,388 3,388
Proceeds3,963 4,792 5,849
New lease liabilities 44 40 85
Repayments(1,856) (2,476)(6,128)
Foreign exchange movements 4 59 (17)
Changes in fair values (6) 12 48
Transferred to liabilities held for sale – – (104)
Other (28) (8) 17
Closing balance 5,259 5,807 3,138
1 Comparative information includes re-presentations for consistency with the current period.
f) Net movement in working capital and other operating activities
A breakdown of the cash outflows resulting from the increase in working capital and other operating
activities from the Statement of Cash Flows is presented in the following table.
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Trade and other receivables(595) (374)
Inventories(2,723) (3,601)
Trade and other payables 980 878
Derivatives (5) (212)
Other movements(27) (10)
Total increase in working capital and other operating activities(2,370) (3,319)
1 Comparative information includes re-presentations for consistency with the current period.
This table includes movements in held for sale working capital balances, as these form part of the
adjustments presented in the Statement of Cash Flows for the Group.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
5 Other disclosures continued
g) Fair value measurement
The fair value hierarchy for financial assets and financial liabilities measured at fair value is presented in the following table.
LEVEL 1LEVEL 2LEVEL 3
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
31 JUL 2025
AUDITED
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
31 JUL 2025
AUDITED
31 JAN 2026
UNAUDITED
31 JAN 2025
UNAUDITED
31 JUL 2025
AUDITED
Measured at fair value on a recurring basis
Derivative assets 24 133 141 821 500 517 – – –
Derivative liabilities (38) (18) (28) (148) (777) (194) – – –
Other 53 46 50 – – – 75 85 70
Measured at fair value on a non-recurring basis
Net (liabilities)/assets held for sale – – – (7) – (2) – – –
Fair value 39 161 163 666 (277) 321 75 85 70
The fair value of financial assets and liabilities not measured at fair value approximates carrying value.
h) Dividend declared after the reporting period
On 22 March 2026, the Board declared a fully imputed interim dividend of 24 cents per share together with a special dividend of 16 cents per share, to be paid on 14 April 2026 to all holders of Co-operative shares on
issue at 30 March 2026.
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Notes to the Interim Financial Statements continued
FOR THE SIX MONTHS ENDED 31 JANUARY 2026
($ MILLION)
6 Re-presentations
AT A GLANCE
This note provides a summary of the effect of excluding the Consumer and associated businesses
from continuing operations and presenting it as a discontinued operation in the comparative period
Statement of Profit or Loss and Other Comprehensive Income, for consistency with the current
period treatment.
The following table shows the financial effect on the Group’s Statement of Profit or Loss and Other
Comprehensive Income from the re-presentation of the Consumer and associated businesses from
continuing operations into discontinued operations.
31 JAN 2025
CONTINUING
OPERATIONS
TRANSFERRED
TO
DISCONTINUED
OPERATIONS
31 JAN 2025
CONTINUING
OPERATIONS
RE-PRESENTED
Revenue 12,592 1,19211,400
Cost of goods sold (10,364)(733)(9,631)
Gross profit 2,228 459 1,769
Other operating income 62 4 58
Foreign exchange gains 17 3 14
Operating expenses (1,208) (350) (858)
Net finance costs (85) (1) (84)
Profit before tax 1,014 115 899
Tax expense (293) (52) (241)
Profit after tax 721 63 658
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Non-GAAP measures
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 from profit after tax to total Group normalised EBITDA
GROUP $ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Profit after tax750729
Net finance costs from continuing operations8784
Net finance costs from discontinued operations11
Tax expense from continuing operations263241
Tax expense from discontinued operations13052
Depreciation and amortisation from continuing operations256262
Depreciation and amortisation from discontinued operations355
Total Group EBITDA 1,4901,424
Consumer and associated businesses divestment costs3640
Total normalisation adjustments3640
Total Group normalised EBITDA1,5261,464
Reconciliation from continuing and discontinued profit after tax to continuing and
discontinued normalised EBIT
GROUP $ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Profit after tax from continuing operations700658
Net finance costs from continuing operations 8784
Tax expense from continuing operations263241
Total continuing operations EBIT (Operating profit)1,050983
Normalised sales between continuing and discontinued operations
2
(138)(109)
Normalised continuing operations EBIT (Operating profit)912874
1 Comparative information includes re-presentations for consistency with the current period.
2 Trade terms for sales and purchases between the Group and the Consumer and associated business will change following the
divestment. The pricing elements relating to trade terms which are not expected to continue following the divestment have
been normalised for continuing operations, with an offsetting impact in discontinued operations.
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Reconciliation from profit after tax to normalised profit after tax and normalised
earnings per share
GROUP $ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Profit after tax 750729
Consumer and associated businesses divestment costs3640
Normalisation of Consumer and associated businesses tax expense arising
from separation activities54–
Normalised profit after tax840769
Profit attributable to non-controlling interests(20)(21)
Normalised profit after tax attributable to equity holders
of the Co-operative820748
Weighted average number of Co-operative shares (thousands of shares)1,606,3091,607,067
Normalised earnings per share ($)
2
0.510.47
Reconciliation from continuing and discontinued gross profit to continuing and discontinued
normalised gross profit and total Group gross profit
GROUP $ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Gross profit from continuing operations1,8841,769
Normalised sales between continuing and discontinued operations
3
(138)(109)
Normalised gross profit from continuing operations1,7461,660
Gross profit from discontinued operations510459
Normalised sales between continuing and discontinued operations
3
138109
Normalised gross profit from discontinued operations648568
Total Group gross profit2,3942,228
1 Comparative information includes re-presentations for consistency with the current period.
2 Normalised earnings per share is based on weighted average number of Co-operative shares.
3 Trade terms for sales and purchases between the Group and the Consumer and associated business will change following the
divestment. The pricing elements relating to trade terms which are not expected to continue following the divestment have
been normalised for continuing operations, with an offsetting impact in discontinued operations.
Non-GAAP measures CONTINUED
Reconciliation from profit after tax to total Group normalised EBIT
GROUP $ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Profit after tax750729
Net finance costs from continuing operations8784
Net finance costs from discontinued operations11
Tax expense from continuing operations263241
Tax expense from discontinued operations
13052
Total Group EBIT (Operating profit)1,2311,107
Normalisation adjustment (as detailed above)3640
Total Group normalised EBIT (Operating profit)1,2671,147
Reconciliation from continuing and discontinued profit after tax to continuing and
discontinued normalised EBIT
GROUP $ MILLION
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
Profit after tax from discontinued operations5071
Net finance costs from discontinued operations11
Tax expense from discontinued operations13052
Total discontinued operations EBIT (Operating profit)181124
Consumer and associated businesses divestment costs3640
Normalised sales between continuing and discontinued operations
3
138109
Normalised discontinued operations EBIT (Operating profit)355273
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Non-GAAP measures CONTINUED
The Group uses adjusted net debt, a non-GAAP debt measure in monitoring its net debt position and in
calculating the Group’s debt to EBITDA ratio, gearing ratio, and return on capital.
Adjusted net debt is 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.
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
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2026
UNAUDITED
31 JAN 2025
1
UNAUDITED
31 JUL 2025
1
AUDITED
Total borrowings5,2595,8073,138
Add: Bank overdraft6514930
Less: Cash and cash equivalents(117)(218)(309)
Add: Borrowings attributable to disposal groups held for sale101–104
Less: Cash and cash equivalents attributable to disposal
groups held for sale(183)–(94)
Add: Cash adjustments of 25% for cash held by subsidiaries
(including cash and cash equivalents attributable to disposal
groups held for sale)755449
Less: Derivatives used to manage changes in hedged risk on
debt instruments(273)(342)(298)
Adjusted net debt4,9275,4502,620
Equity excluding hedge reserves8,5608,3738,333
Total capital13,48713,82310,953
Adjusted net debt gearing ratio36.5%39.4%23.9%
1 Comparative information includes re-presentations for consistency with the current period.
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TERMSDEFINITION
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.
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 Investedis capital expenditure plus right of use asset (e.g. leases) additions
and business acquisitions, including equity contributions, long-term
advances, and other investments.
TERMSDEFINITION
Cash operating expenses per
kgMS
is operating expenses (excluding sold businesses), less non-cash
costs (depreciation, amortisation and impairments). Shown by
kilogram of New Zealand and Australia milk solids collected.
Cash operating expenses
per kgMS (Continuing
Operations)
is continuing operations operating expenses, less non-cash costs
(depreciation, amortisation and impairments). Shown by kilogram of
New Zealand milk solids collected.
Ceased Shareholderis a Shareholder that has given notice of ceasing supply, or is
treated as having given such a notice, and whose cease notice has
become effective.
Consumeris 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.
Core Operationsrepresents core operating functions including New Zealand milk
collection and processing operations and assets, supply chain,
Fonterra Farm Source™ retail stores, and the Central Portfolio
Management function which manages the physical and financial
commodity portfolios.
Core Operations
manufacturing cash costs
per kgMS
is the logistics costs, variable and fixed costs of the COO business
unit less non-cash costs (depreciation, amortisation and impairment)
shown by kilogram of New Zealand milk solids collected. Excludes
milk, ocean freight and farm costs.
Glossary
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TERMSDEFINITION
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, net foreign exchange gains/losses and any
normalised EBITDA relating to entities divested during the year.
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.
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.
Eliminationsrepresents eliminations of inter-business unit sales.
TERMSDEFINITION
Farmgate Milk Pricemeans the average price paid by Fonterra in New Zealand for each
kgMS supplied by Fonterra’s farmer shareholders under Fonterra’s
standard terms of supply. 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
TM
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 Dairy Trade (GDT)means the electronic auction platform that is used to sell commodity
dairy products.
Glossary CONTINUED
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TERMSDEFINITION
Gross Marginis gross profit divided by revenue from sale of goods.
Growth Capital Expenditurerepresents investments to improve earnings and/or the milk price
(either by revenue expansion or cost reduction) or implement new
capabilities that support delivery of strategic priorities. This includes
organic growth of existing business operations, and inorganic
growth through mergers and acquisitions.
Ingredientsrepresents the channel comprising bulk and specialty dairy products
such as milk powders, dairy fats, cheese and proteins manufactured
either by Fonterra 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.
Mainland GroupMainland Group Holdings Limited is the parent entity of the
Consumer and associated businesses at the divestment date.
Net debtmeans adjusted net debt.
Non-Reference Productsmeans all NZ milk solids processed by Core Operations, except for
Reference Commodity Products.
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. Normalised is used to indicate
that a measure or sub-total has been adjusted for the impacts of
normalisation adjustments. E.g. ‘Normalised operating profit’.
TERMSDEFINITION
Operating profit (EBIT)is profit before net finance costs and tax.
Operating profit (EBIT)
margin
is EBIT divided by revenue from sale of goods.
Price Relativitiesrefers to the difference in the weighted average price (in USD)
between the Reference Product portfolio and Non-Reference
Product portfolio. The difference between these two weighted
average prices is a key driver of the Ingredients’ gross margin.
Product ChannelFonterra has three channels: Ingredients, Foodservice &
Core Operations.
Reference Commodity
Products (also referred to as
Reference Products)
are the five commodity groups used to calculate the Farmgate
Milk Price, being Whole Milk Powder (WMP) and Skim Milk Powder
(SMP), and their by-products Butter, Anhydrous Milk Fat (AMF) and
Buttermilk Powder (BMP).
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 earnings per share, less dividend per share. Retentions are
reported as nil where Fonterra has reported a net loss after tax.
Return on Capital (ROC) is calculated as Total Group normalised EBIT including finance
income on long-term advances less a notional tax charge, divided by
average capital employed.
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TERMSDEFINITION
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.
Supplying Shareholderis a shareholder supplying milk to the Co-op.
Sustaining capital
expenditure
represents investments to maintain the capability of our existing
assets from risk management, legislation/regulation commitments,
business continuity and capital replacement, as well as projects that
drive the Co-operative's sustainability targets.
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 Payoutmeans the total cash payment per milk solid that is backed by a
share, being the sum of the Farmgate Milk Price per kgMS and the
dividend per share.
Trade working capitalis total trade and associate receivables plus inventories, less trade
and associate payables and accruals. It excludes amounts owing to
suppliers and employee entitlements and includes trade working
capital classified as held for sale.
TERMSDEFINITION
WACCmeans weighted average cost of capital.
Weighted average share
price
represents the average price Fonterra Co-operative Group Limited
shares traded at, weighted against the trading volume at each price
over the reporting period.
Working capital daysis calculated as 13-month rolling average working capital divided
by revenue from the sale of goods (excluding impact of derivative
financial instruments) multiplied by the number of days in the period.
The working capital days calculation excludes other receivables,
prepayments, other payables and includes working capital classified
as held for sale.
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