#1จะ Fonterra Business Performance 2022 Annual Results#22022 Annual Results Farmgate Milk Price $9.30 per kgMS Reported profit after tax¹ Fonterra™ Dairy for life $583 million • $16m Normalised profit after tax' $591 million $3m 35c earnings per share² Dividend 20c per share Return on capital 6.8% + Note: Figures are Total Group, which includes continuing and discontinued operations 1. Includes amounts attributable to non-controlling interests 2. Attributable to equity holders of the Co-operative, excludes $23 million of normalised profit after tax attributable to non-controlling interests . Fonterra has delivered a higher Farmgate Milk Price and strong earnings, total pay-out of $9.50 per kgMS Diversified and resilient earnings - top end of guidance • Good progress on key drivers of our strategy, focusing on New Zealand milk, sustainability, and dairy innovation and science • Increased working capital has driven higher debt levels but will improve as working capital returns to normal levels in FY23 • Continued strong dairy industry fundamentals 2#3Higher dairy prices and favourable price relativities Monthly Milk Prices (NZ$) 10.00 8.00 6.00 31 May 31 Aug (US$/MT) Reference and non-reference price relativities on GDT 6,000 5,000 4,000 3,000 Fonterra Dairy for life H1 FY22 H2 FY22 30 Nov 28 Feb 31 May 31 Jul 21 31 Jan 22 31 Jul 22 Monthly Milk Price 2020/2021 Season -Monthly Milk Price 2021/2022 Season Consistently higher monthly milk price across the 2021/22 season compared to prior season The average of the monthly milk prices are equivalent to $7.54 and $9.30 for 2020/21 and the 2021/22 seasons, respectively 1. Source: GlobalDairy Trade Reference product shipment price Non-reference product shipment price²,4 Narrow price relativities in the first half; strong increase in non-reference product prices improving price relativities in second half More favourable than expected price relativities contributed to stronger fourth quarter earnings 2. The shipment price is a weighted average price of GDT contracts struck 1 to 5 months prior to the agreed shipment month. Shipment month is the month in which the sale would be deemed for financial reporting purposes to have been completed, and will normally be the month in which the sale is invoiced and the product is shipped 3. Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and butter prices achieved on GDT 4. Non-reference product shipment price is represented by the cheddar prices achieved on GDT 3#4Drivers of Farmgate Milk Price $7.54 $(0.11) FY21 Farmgate Milk Price $(0.48) $(0.17) $2.52 $9.30 Volume Product prices Foreign exchange Net costs 1 Revenue 1. Net costs include capital costs and cash costs Fonterra Dairy for life FY22 Farmgate Milk Price • Lower milk volume to convert into product Product prices increased, with the average WMP price in the 2022 season 20.9% higher at US$4,019 per metric tonne compared to US$3,323 per metric tonne in the prior year Impact of foreign exchange increased as a result of the higher hedged rate due to the NZ dollar strengthening over the prior seasons Increased costs mainly due to inflationary pressure on cash costs#5Total Group business performance million 2021 2022 %A2 Sales volume ('000 MT) Revenue ($) 4,102 3,924 (4)% 21,124 23,425 11% Cost of goods sold ($) (18,010) (20,085) (12)% Gross profit ($) Gross margin (%) 3,114 14.7% 3.340 14.3% 7% Operating expenses ($) (2,242) (2,397) (7)% Other³ ($) 80 48 (40)% Normalised EBIT ($) 952 991 4% Normalised profit after 588 591 1% tax4 ($) Normalised EPS5 (cents) 34 35 3% Note: Total Group figures are for the year ended 31 July. This includes continuing and discontinued operations and are on a normalised basis unless otherwise stated 1. 2021 performance includes Ying and Yutian China Farming hubs and China Farms joint venture, which were sold during FY21 2. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures Fonterra Dairy for life • · Increased revenue from higher product prices, partially offset by lower sales volumes reflecting lower milk collections in the first nine months of the year and shipping disruptions Higher gross profit despite increased cost of milk, driven by gross margin achieved in Ingredients, particularly in the protein portfolio Operating expenses up due to inflationary pressures, supply chain disruption and impairment of some of our Asia brands 'Other' includes $(80) million adverse revaluation of the Sri Lankan business payables due to devaluation of the rupee Normalised profit after tax is up $3 million, due to higher earnings and favourable interest expense Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 3. 4. Includes amounts attributable to non-controlling interests 5. 6. 5 Attributable to equity holders of the Co-operative, excludes $23 million of normalised profit after tax attributable to non-controlling interests The impairment includes a $22 million impairment of Anlene, an $11 million impairment of Anmum and a $1 million impairment of Chesdale, with the carrying amount of these brands now at $336 million as at 31 July 2022. Our Asia brands also include Anchor which was not impaired 5#6Allocation Allocation of New Zealand milk solids by Product Channel % of milk solids 2021 2022 49% 49% 25% 24% 12% 13% 9% 5% 6% 8% GDT Core Active Living Foodservice Consumer Ingredients Higher margin Fonterra Dairy for life A key driver of our strategy and earnings growth is shifting milk into higher margin products Active Living allocation increased as demand for milk protein concentrate, casein and caseinate products grew Foodservice allocation has continued to grow as innovation enabled us to expand the uses of UHT cream Percentage of milk solids in our Consumer channel reduced due to limiting sales volumes in Sri Lanka while the crisis unfolds 6#7Diversified across markets and products Higher margins in the Ingredients channel in the second half Asia Pacific AMENA Greater China Total Volume ('000 MT)' 1,370 1,355 1,029 3,754 n/c 1% 13% 4% EBIT contribution¹² Ingredients $192m $442m $168m $231m Foodservice $(13)m $92m Consumer $58m³ $144m $237 $68m Total $(4)m $19m $89m $21m $527m $191m $282m $152m Fonterra Dairy for life EBIT by Quarter¹² 284 239 264 195 129 91 85 $916m (6) $551m 94 56 160 46 97 18 27 58 39 14 $155m $120m $138m $(5)m $3m $432m $29m $231m 76 $142m 11 114 92 28 67 79 18 (22) $168m Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY21 FY22 Note: Figures are for the year ended 31 July 1. Prepared on a normalised continuing operations basis. Normalised EBIT contributions sum to $1,196 million, and does not align to reported continuing operations due to excluding unallocated costs and eliminations. Comparative information includes re-presentations for consistency with the current period 2. Inclusive of Group Operations' EBIT attribution 3. Includes $(80) million adverse revaluation of payables in Sri Lanka 7#8Earnings driven by strong Ingredients' margins Fonterra Dairy for life Asia Pacific 2021 EBIT Ingredients $24m Foodservice $79m Consumer $202m = $305m AMENA Ingredients $211m Foodservice $15m Consumer $110m $336m Greater China Ingredients $130m Foodservice $275m Consumer $(2)m $403m Eliminations¹ $(148)m Total $896m 2022 EBIT Change $192m 700% $(13)m $58m² (71)% Product channel EBIT ($m) $237m (22)% 1,000 $442m 109% 800 $(4)m $89m (19)% 600 $527m 57% 400 $282m 117% $155m (44)% 200 $(5)m (150)% $432m 7% $(214)m (45)% Ingredients $982m 10% Foodservice Consumer Note: Figures are for the year ended 31 July and prepared on a normalised continuing operations basis. Comparative information includes re-presentations for consistency with the current period Eliminations and unallocated costs 1. 2. Includes $(80) million adverse revaluation of payables in Sri Lanka 8#9New Zealand manufacturing performance Increased manufacturing complexity as we shift to higher value products Milk Utilisation 96.5% 96.4% 96.4% 96.4% 96.2% 2018 2019 2020 2021 2022 Made Right First Time Cost of Quality Fonterra Dairy for life $95m $90m 95.0% 94.0% 94.5% $72m 91.4% 91.9% $58m $58m 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Increased utilisation of milk solids while manufacturing a more complex product mix as we shift volume to our Active Living portfolio, including manufacturing 8% less WMP As we shift our product mix towards higher value products manufacturing complexity increases. We expect to return to our underlying upward trend Higher value of milk per tonne, two specific bacterial issues in NZ and an ingredient formulation issue contributed to higher cost of quality. The cost is equivalent to 0.4% of NZ cost of goods sold Note: Metrics are for the year ended 31 July 9#10A strong balance sheet Working Capital • Our 'A band' credit rating and key metrics. demonstrate our strong balance sheet position • These metrics have increased but will improve as working capital returns to normal levels throughout FY23 FY23 sales and shipping profile supports inventory levels returning to normal Net Debt¹,2 Fonterra Dairy for life 6.6 95.7 6.0 82.7 82.8 84.8 90.6 5.2 5.3 4.3 2018 2019 2020 2021 Working Capital Days 2022 2018 2019 2020 2021 ■Net Debt ($ billion) 2022 Leverage Return on Capital • Improved return on capital due to higher earnings offsetting the impact of additional working capital on our capital employed 4.6 4.3 6.2% 6.6% 6.6% 6.8% 3.3 3.2 5.6% 2.7 Note: Figures are for the year ended 31 July except where otherwise stated 1. As at 31 July. Refer to Glossary for definition 2. Comparative figures are shown on a consistent basis with current year 50% 50% 44% 39% 42% 2018 2019 2020 2021 2022 Gearing Ratio (%) 2018 -Debt to EBITDA (x) 2019 2020 2021 2022 ■Return on Capital (%) 10#11Strong balance sheet provides flexibility to manage market volatility and disruptions Change in net debt ($ billion) Fonterra Dairy for life 1.2 0.8 (0.4) Payables Inventory Receivables & other² Increase in working capital 1.6 5.3 0.7 4.3 (1.8) 0.5 FY21 net debt Operating Net capex & Interest, dividend & Increase in working cashflows investments other capital 1. Excluding working capital 2. Includes supplier payables and other movements FY22 net debt Strong balance sheet enabled us to hold higher working capital through year end Increase of $1.6 billion in working capital resulted in an increase in year end net debt of $1.0 billion 88% of total inventory was priced and contracted but not shipped at year end Net debt position will improve as working capital returns to normal levels throughout the year FY23 sales and shipping profile supports inventory levels returning to normal 11#12Capital invested $ million Fonterra Dairy for life 1,022 161 724 124 608 617 461 525 63 30 79 53 260 106 37 555 534 466 400 382 340 2018 2019 2020 2021 2022 ■Business growth capital expenditure Total capital invested was $617 million, comprised of capital expenditure of $587 million and other capital invested of $30 million Of the $587 million capital expenditure: $534 million was allocated to essential projects to maintain and improve existing assets $53 million was allocated to business growth projects to drive future earnings growth The $30 million of other investments mainly comprised of right-of-use assets and equity investments, including investment in new innovation opportunities ■ Other capital invested ■Essential capital expenditure Note: Refer to Glossary for definition of capital invested and capital expenditure 12#13Capital invested 109 41 16 Capital invested by business units ($m) 27 24 16 14 444 33 Group Operations 162 36 capital invested ($m) 36 54 42 Fonterra Dairy for life Group Operations Asia Pacific AMENA Group Functions Greater China Health, Safety and Risk Wastewater Decarbonisation Information Technology Other Milk Collections Assets Electrical Infrastructure Food Safety and Quality Buildings Innovation The majority of our capital invested is allocated to Group Operations to ensure our processing sites are fit for purpose Key projects for FY22 include: wastewater upgrades at our Te Awamutu and Tirau site biomass boiler installation to replace coal at several sites improving refrigerant technology at Whareroa Asia Pacific's capital spend included acquiring a secondary cheese processing site in Australia to further expand our cheese manufacturing lines 13#14Investing in sustainability Doing what's right for customers, the planet and our Co-op Total GHG emission in Fonterra's value chain¹² Fonterra Dairy for life 26,867 2,201 25,931 2,115 25,572 2,043 24,480 1,944 24,456 23,622 23,328 22,353 FY18 - baseline FY20 Farming Manufacturing FY21 FY22 ■Distribution and other Manufacturing GHG emissions² 2,201 2,115 2,043 1,944 1,310 1,221 1,248 1,178 Reducing annual manufacturing emissions by converting coal boilers to wood biomass: completion of Te Awamutu in FY21 reduced our emissions from coal by more than 9%³. The project cost $11 million Stirling to be completed during FY23 will reduce our emissions from coal by about 2%³. The project is expected to cost $30 million one boiler at Waitoa to be completed in FY24. Expected to reduce our emissions from coal by more than 5%³. The project is expected to cost $102 million 891 FY18 - baseline Coal Other 894 795 766 FY20 FY21 FY22 1. Farming and Manufacturing emissions do not add to Total GHG emissions. Distribution and other emissions are not displayed, these are less than 1% of our total emissions 2. Measured in 000's tCO2-e 3. Relative to FY18, the baseline year 14#15Drivers of return on capital NZD million 2021 2022 Total Group normalised EBIT 952 991 Finance income on long-term advances 8 7 Notional tax charge (155) (161) Total Group normalised EBIT plus finance income on long-term advances less notional tax charge 805 837 Capital employed at year end Impact of seasonal capital employed Average capital employed Return on capital (%) 10,863 12,179 1,418 12,281 177 12,356 6.6% 6.8% Fonterra Dairy for life Return on capital improved from 6.6% to 6.8%, reflecting: increase in normalised EBIT, partially offset by; o additional working capital increasing our average capital employed The impact on the average capital employed from the higher working capital in the second half was largely offset by lower net debt in the first half 15#16Our strategy positions us well OUR STRATEGIC CHOICES $ Focus on Aotearoa New Zealand Milk PERFORMANCE TARGETS 40-50% EBIT increase from FY21 ~9-10% Return on capital Increase dividends to ~40-45 cents per share Aspiration to be Net zero by 2050 l INVESTMENT Be a leader in dairy Innovation & science ~$1 billion 2 in sustainability ~$1 billion invested in moving more milk to higher value products ~$160m per annum in R&D 逝 DISTRIBUTION OF FUNDS Be a leader in ~$1 billion Intended to be distributed to shareholders after asset sales ~$2 billion for mix of investment in further growth and return to shareholders Sustainability Note: These targets are based on assumptions and risks that are set out in the Appendix to the booklet Our Path to 2030, including the assumption of an average Farmgate Milk Price for the decade of $6.50 - $7.50 per kgMS. We are aiming to achieve these targets and they should not be taken as forecasts or guarantees of returns. They are subject to successfully completing a number of business initiatives. 16#17We're taking solid steps toward our strategy Fonterra Dairy for life Anchor FOODMOFESSIONALS Expanded cream cheese range dectric Milk-E EXIT water water water water water water wat wa Maungatūroto: 2022 Water NZ Excellence Awards Increased Active Living milk solids 375 Piloting new technology to decarbonise our business Partnering with Government and sector methane challenge Soprole Desde 1949) Progressing divestment 17#18Forecast 2022/23 Season Farmgate Milk Price Fonterra Dairy for life 2020/2021 Season 2021/2022 Season 2022/2023 Season Forecast (US$/MT) Forecast Farmgate Milk Price $8.50 - $10.00 per kgMS Midpoint of $9.25 per kgMS reflects: o constrained supply as growth from key milk producing regions expected to remain low 。 continuing strong underlying demand The wide range reflects several risks, such as COVID-19 and macroeconomic factors, including global inflation, global economic growth and volatility in foreign exchange markets 4,000 $7.54 3,000 31 May 20 $9.30 31 May 21 Reference product shipment price $9.25 31 May 22 30 Nov 22 -> Reference contract product shipment price' Average reference product shipment price for the season Source: Global Dairy Trade. Data is up to GDT event 315 on 6 September 2022 1. Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and butter prices 2. The shipment price is a weighted average price of GDT contracts struck 1 to 5 months prior to the agreed shipment month. Shipment month is the month in which the sale would be deemed for financial reporting purposes to have been completed, and will normally be the month in which the sale is invoiced and the product is shipped 3. The contracted shipment price is the weighted average shipment price of GDT contracts won 1 to 5 months prior on the GDT platform. These contracts are yet to be shipped or invoiced and the weighted average price will change closer to the actual shipment date as new contracts are written 18#192023 earnings outlook Forecast Earnings 45-60c per share • The range reflects: FY22 H1 FY22 H2 FY23 H1 (US$/MT) 5,000 。 continuing strong underlying demand sustained favourable price relativities between our reference and non-reference portfolios 4,000 31 Jul 21 protein portfolio contract rate well positioned for this stage of the season 31 Jan 22 Fonterra Dairy for life 31 Jul 22 31 Jan 23 Reference product shipment price' Non-reference product shipment price¹,4 Reference product contract shipment price Non-reference product contract shipment price 2,4 Source: GlobalDairy Trade. Data is up to GDT event 315 on 6 September 2022 1. The shipment price is a weighted average price of GDT contracts struck 1 to 5 months prior to the agreed shipment month. Shipment month is the month in which the sale would be deemed for financial reporting purposes to have been completed, and will normally be the month in which the sale is invoiced and the product is shipped 2. The contracted shipment price is the weighted average shipment price of GDT contracts won 1 to 5 months prior on the GlobalDairy Trade platform. These contracts are yet to be shipped or invoiced and the weighted average price will change closer to the actual shipment date as new contracts are written 3. Reference product shipment price is represented by a weighted average of the WMP, SMP, AMF and butter prices achieved on GDT 4. Non-reference product shipment price is represented by the cheddar prices achieved on GDT 19#20Appendix 20#21Fonterra™ Dairy for life New Zealand Milk Collections 1,505 1,523 1,517 1,539 1,478 Total Pay-out Sales Volume $9.50 4,123 4,152 4,069 4,102 3,924 $6.79 $6.35 $0.10 $0.00 $7.19 $7.74 $0.20 $0.05 $0.20 $6.69 $6.35 $7.14 $7.54 $9.30 2019 2020 Milk Price ($) 2018 2019 2020 2021 2022 ■NZ Milk Collection (million kgMS) 2018 Key financial metrics for Total Group Revenue FY22¹ 2021 2022 ■ Dividend ($) 2018 2019 2020 2021 ■ Sales Volume ('000 MT) 2022 Gross Profit OPEX 23.4 20.4 21.0 21.1 19.9 3,152 3,208 3,340 3,008 3,114 2,496 2,282 2,323 2,242 2,397 2018 2019 2020 2021 2022 2018 ■Revenue ($ billion) 2019 2020 2021 2022 ■Gross Profit ($ million) 1. Total Group figures for the year ended 31 July. This includes continuing and discontinued operations, and are on a normalised basis unless stated otherwise 2018 2019 2020 2021 ■ Opex ($ million) 2022 27 21#22Fonterra™ Dairy for life Normalised EBIT 902 879 952 991 812 Reported EBIT Normalised Profit After Tax² 1,147 588 591 959 976 407 398 275 262 (17) 2018 2019 2020 2021 2022 EBIT ($ million) 2018 2019 2020 2021 2022 ■Reported EBIT ($ million) 2018 2019 2020 2021 2022 Normalised NPAT ($ million) Key financial metrics for Total Group FY22¹ Reported Profit After Tax² Capital Invested³ Leverage 659 599 1,022 583 161 724 608 617 4.6 4.3 3.3 3.2 2.7 124 525 63 30 (196) 861 106 600 545 587 (610) 419 50.1% 49.5% 44.2% 38.5% 42.4% 2018 2019 2020 2021 2022 ■Reported NPAT ($ million) 2018 2019 2020 2021 ■Capex Other 2022 2018 2019 2020 2021 2022 Gearing Ratio4 (%) -Debt to EBITDA (x) 1. Total Group figures for the year ended 31 July. This includes continuing and discontinued operations, and are on a normalised basis unless stated otherwise 2. Includes amounts attributable to non-controlling interests 3. Refer to Glossary for definition 4. Comparative figures are shown on a consistent basis with current year 22 22#23Fonterra™ Dairy for life Free Cash Flow² Working Capital Days 1,828 1,417 1,095 600 2018 2019 2020 2021 (324) 96 91 83 83 85 Earnings per Share 24 24 16 24 24 34 34 35 2022 2018 2019 2020 2021 2022 ■Working Capital Days 2018 2019 2020 2021 2022 Normalised EPS (cents) Key financial metrics for ■Free Cash Flow ($ million) Total Group Return on Capital² FY22¹ 6.6% 6.2% 6.6% 6.8% 5.6% 2018 2019 2020 2021 ■Return on Capital (%) 2022 1. Total Group figures for the year ended 31 July. This includes continuing and discontinued operations, and are on a normalised basis unless stated otherwise 2. Refer to Glossary for definition 23#24Fonterra's New Zealand milk collections 90 90 80 60 Volume (m litres/day) 70 60 60 50 50 40 40 Fonterra Dairy for life Peak Day Milk • Fonterra's NZ milk collection for the 2021/22 season reached 1,478 million kgMS, a 4.0% decrease on last season Cold and wet spring with limited sunshine affected pasture growth and collections early in the season Improved North Island collections later in the season due to favourable growing conditions, offset by hot and dry conditions in lower South Island Rain at the very end of the season allowed for pasture covers to recover, ahead of the new season Maintained NZ milk market share at 79.1% 30 Season 30 Total Milk Solids (kgMS) 20 20 2019/20 1,517m (down 0.4%) 83m litres 2020/21 1,539m (up 1.5%) 83m litres 10 2021/22 1,478m (down 4.0%) 80m litres 0 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 24 24#25Reconciliation to Total Group EBIT 31 Jul 2021 31 Jul 2022 Fonterra Dairy for life Continuing Discontinued Continuing Discontinued NZD million Operations¹ Operations' Total Group Operations' Operations¹ Total Group Revenue 20,565 559 21,124 22,953 472 23,425 Cost of goods sold (17,581) (429) (18,010) (19,737) (348) (20,085) Gross profit 2,984 130 3,114 3,216 124 3,340 Gross margin 14.5% 23.3% 14.7% 14.0% 26.3% 14.3% Operating expenses (2,153) (89) (2,242) (2,284) (113) (2,397) Other² 65 15 80 50 (2) 48 Normalised EBIT 896 56 952 982 9 991 Normalisations (9) 16 7 42 (57) (15) Reported EBIT 887 72 959 1,024 (48) 976 1. Refer to Note 1a and 2b of the FY22 Annual Financial Statements 2. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 25#26Normalised items NZD million Global Dairy Trade DPA Brazil Total Impairment (57) (57) Gain on sale 42 42 EBIT 42 (57) (15) Tax impact 7 7 Profit/(loss) after tax 42 (50) (8) Loss attributable to non-controlling interests 24 24 Profit/(loss) after tax attributable to equity 42 (26) 16 holders of the Co-operative Fonterra Dairy for life 26 26#27Earnings per share reconciliation NZD million 2021 2022 Reported profit after tax¹ 599 583 (Profit)/loss attributable to non-controlling interests (21) 1 Reported profit after tax attributable to equity holders of the Co-operative Reported earnings per share (cents)² 578 584 36 36 Normalised profit after tax¹ (Profit)/loss attributable to non-controlling interests Less normalisation adjustments attributable to non-controlling interests Normalised profit after tax attributable to equity holders of the Co-operative Normalised earnings per share (cents)² 588 591 (21) 1 (17) (24) 550 568 34 35 Weighted average number of Co-operative shares ('000) 1. Includes amount attributable to non-controlling interests 2. Attributable to equity holders of the Co-operative 1,613,105 1,613,353 Fonterra Dairy for life 27#28Dividend Calculation Fonterra Dairy for life 20 Total dividend of 20 cents per share 。 Interim dividend of 5 cents o Final dividend of 15 cents Final dividend of 15 cents per share will be paid on 14 October, with interim dividend of 5 cents per share having been paid on 14 April Total dividend represents 59% of attributable earnings NZD cents per share Normalised earnings¹ Add: normalisations Reported earnings¹ 2021 2022 34 35 2 1 36 Less: abnormal gains (6) Net earnings for dividend payment² 30 8 སེ་ 36 (2) 34 Dividend payment percentage (%) 57% 59% Dividend based on attributable earnings 17 20 Dividend based on abnormal gains³ M Total dividend Interim dividend Final dividend 20 5 5 15 15 LO 123 3. Attributable to equity holders of the Co-operative, excludes non-controlling interest Represents net earnings as specified in the Dividend Policy and is calculated as reported profit after tax less abnormal gains FY21 includes the reversal of previous impairment of our China Farms 28#29Increase in working capital due to higher prices and inventory Breakdown of increase in working capital as at 31 July ($ billion) Fonterra Dairy for life (0.4) 0.8 1.2 1.6 Inventory Receivables Payables & other¹ Increase in working capital Closing inventory as at 31 July ($ billion) 3.8 599 ('000 MT) FY21 inventory value 0.4 0.8 5.0 Cost Volume 725 ('000 MT) FY22 inventory value Significantly higher working capital throughout the year and year end, up $1.6 billion, reflecting: higher milk price - impacts both receivables and inventory higher levels of inventory throughout second half and year end Higher year end inventory reflects late season milk production coinciding with shipping constraints 88% of total inventory was priced and contracted but not shipped at year end FY23 sales profile and shipping schedule supports inventory levels returning to normal levels 1. Includes supplier payables and other movements 29 29#30Cash flow and change in net debt NZD million 2021 2022 Cash generated from operations 1,449 1,928 Net change in working capital (171) (1,598) Net taxes paid (84) (137) A. Net cash flows from operating activities 1,194 193 Cash flows from investing activities Divestments and asset sales 782 45 Capital expenditure and other² (559) (562) B. Net cash flows from investing activities 223 (517) Free cash flow (A+B) 1,417 (324) Interest, dividend and other (452) (638) Non-cash changes in net debt (52) (52) 913 (1,014) Fonterra Dairy for life Increase in net debt of $1 billion mainly due to higher working capital and lower proceeds from asset sales Free cash flow of $(324) million was $1.7 billion lower than last year, which reflects: 。 cash generated from operations increased $479 million due to strong underlying performance, offset by; o increase in working capital $(1.6) billion due to the higher milk price and inventory levels net cash flows from investing activities down by $740 million, with prior year benefiting from asset sales Decrease/(increase) in net debt³ Note: Comparative figures are shown on a consistent basis with current year Includes EBIT, non-cash and non-operating adjustments made to EBIT to determine cash generated from operations -23 1. 2. 3. Capital expenditure presented in this table is different to capital expenditure on the Capital Invested page primarily due to treatment of livestock and accruals Net debt includes amounts attributable to disposal groups held for sale 30#31Fonterra™ Dairy for life Diversified Profile¹ NZD DCM Prudent Liquidity Bank Facilities Debt Capital Markets² Maturity Profile Maturity Profile 7% Drawn Facilities FY23 FY23 Bank Facilities USD DCM $1.0bn 16% 27% FY24 FY24 Diversified 50% and prudent funding position CNY DCM 2% FY25 FY25 FY26 FY26 FY27 FY27 FY28 FY28 FY29 FY29 Undrawn FY30 FY30 Facilities³ FY31 FY31 AUD DCM 10% $2.7bn 73% 0.0 1.0 2.0 3.0 Includes undrawn facilities and commercial paper. DCM is debt capital 1. markets 2. Excluding commercial paper EUR/GBP 15% 3. Undrawn facilities includes $0.4bn stepped down during the year, reinstated from 1 Sept 2022 4. WATM is weighted average term to maturity Note: As at 31 July 2022 and excludes amounts attributable to disposal groups held for sale $ billion WATM4: 3.5 years 0.0 1.0 2.0 3.0 $ billion WATM4: 3.6 years 31#32Operating expenses Fonterra Dairy for life NZD million¹ 2021² 2022 Costs allocated to regions Selling & marketing 656 667 Distribution & storage 543 588 • Administration expenses 633 669 Research & development 82 83 Other expenses 16 72 Total allocated operating expenses 1,930 2,079 Unallocated costs 223 205 Operating expenses from 2,153 2,284 continuing operations · Operating expenses from 89 113 discontinued operations Total Group operating expenses 2,242 2,397 1. Normalised basis. Does not align to FY22 Annual Financial Statements, predominately due to additional categories 2. $59 million of 'Other' expenses have been reclassified to Administration expenses for consistency with the current period Total Group operating expenses increased $155 million reflecting: o inflationary pressure and supply chain disruptions increased distribution & storage, and administration expenses by $81 million o increased 'Other' expenses of $56 million reflects Asia brands impairment and costs associated with discontinuing some products that are not aligned with our strategy Unallocated costs decreased $18 million due to releasing a provision held at Group level Increased costs in discontinued operations due to higher distribution and storage costs in DPA Brazil 32 32#33Unallocated costs¹ NZD million² 2021 2022 Farmer services 44 44 Communication and community 13 16 Fonterra Board & Co-operative 7 6 Council • Governance support 34 36 Group finance, property & support 42 44 People & culture 10 16 Other 73 43 Total 223 205 1. Refer to Glossary for definition 2. Normalised basis Fonterra Dairy for life Unallocated costs are favourable $18 million largely due to 'Other' 'Other' is favourable due to release of a provision at Group level following a final judicial interpretation on the application of the Holidays Act 2003 in New Zealand to certain discretionary incentive payments 33 33#34Group performance by channels Ingredients Volume ('000 MT) 2,197 From 2,346 Revenue ($ million) 15,703 From 13,697 ↑ Gross margin 10.7% From 8.1% Foodservice Volume ('000 MT) 509 From 498 Revenue ($ million) 3,314 From 2,959 Gross margin Consumer Volume ('000 MT) 1,048 From 1,070 ↓ Revenue ($ million) 4,134 From 4,070 Gross margin 25.8% From 28.4% 14.5% From 22.9% $ million ■2021 2022 1,684 1,104 Gross profit Fonterra Dairy for life 1,154 1,067 916 677 365 479 369 138 142 310 EBIT Gross profit EBIT Gross profit EBIT Note: Figures are for the year ended 31 July. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. Comparative information includes re-presentations for consistency with the current period 34#35Ingredients million 2021 2022 %A¹ 1 Sales volume² ('000 MT) 2,346 2,197 (6)% Revenue ($) 13,697 15,703 15% Gross profit ($) 1,104 1,684 53% Gross margin (%) 8.1% 10.7% . Operating expenses ($) (772) (871) (13)% Other³ ($) 33 103 212% Normalised EBIT4 ($) 365 916 151% Includes EBIT attribution (109) 260 from Group Operations5 ($) Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. Comparative information includes re-presentations for consistency with the current period 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other channels 3. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 4. Includes EBIT attribution from Group Operations 5. Included in Ingredients' EBIT. Refer to Glossary for explanation of Group Operations . . Fonterra Dairy for life Strong performance in the Ingredients channel across multiple markets and products at a time of constrained milk supply Gross profit and margins improved reflecting: 。 higher product prices, particularly in our protein portfolio o improved product mix, including increased allocation to our higher value Active Living products, partially offset by; reduced sales volumes due to lower milk collections and shipping disruptions 'Other' up due to higher other operating income and favourable foreign exchange movements Favourable allocation from Group Operations reflects improved margins, particularly in casein 35#36New Zealand sourced Ingredients product mix 2021 2022 Sales Volume ('000 MT)¹ Reference products 1,817 1,629 Non-reference products 884 822 Revenue¹ $ billion $ per MT $ billion $ per MT Reference products 9.4 5,162 10.4 6,361 Non-reference products 5.1 5,780 5.7 6,951 Cost of Milk Reference products (7.4) (4,069) (8.3) (5,077) Non-reference products (3.3) (3,678) (3.7) (4,494) Fonterra Dairy for life The average reference product sales price per metric tonne has increased 23%, driven by all products: in particular, AMF and butter, fat-based products increased 31% and 29%, respectively The average non-reference product sales price per metric tonne has increased 20%: 。 strong performance from individual products such as casein and whey protein concentrate (WPC) 。 other products, such as cheese, have had more modest prices increases Cost of milk increased 25% and 22% for reference products and non-reference products, respectively, with fat-based products getting higher allocation of milk cost relative to protein products 1. Excludes bulk liquid milk. Bulk liquid milk for the year ended 31 July 2022 was 68,000 MT of kgMS equivalent (the year ended July 2021 was 72,000 MT of kgMS equivalent) Note: Figures represent Fonterra-sourced New Zealand milk only. Reference products are products used in the calculation of the Farmgate Milk Price - WMP, SMP, BMP, Butter and AMF. Milk solids used in the products sold were 919 million kgMS in reference products and 424 million kgMS non-reference products (previous comparative period 1,019 million kgMS reference products and 442 million non-reference products) 36#37Foodservice Fonterra Dairy for life million 2021 2022 %A¹ 1 Sales volume² ('000 MT) 498 509 2% Revenue ($) 2,959 3,314 12% Gross profit ($) 677 479 (29)% Gross margin (%) 22.9% 14.5% Operating expenses ($) (315) (346) (10)% Other³ ($) 7 5 (29)% Normalised EBIT4 ($) 369 138 (63)% Includes EBIT attribution 4 (71) from Group Operations5 ($) Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other channels 3. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 4. Includes EBIT attribution from Group Operations 5. Included in Foodservice's EBIT. Refer to Glossary for explanation of Group Operations • • Sales volumes up due to COVID-19 restrictions relaxing in key markets and growth of our Quick Service Restaurant portfolio Gross profit down, particularly in Greater China and South East Asia, due to: " o in-market sales pricing unable to adjust at the same rate as rising cost of milk weaker market conditions including COVID-19 restrictions and weather events Unfavourable allocation from Group Operations reflects lower margins on products such as mozzarella 37#38Consumer Fonterra Dairy for life 。 in-market sales pricing unable to adjust at the same rate as rising cost of milk in other markets million 2021 2022 %A¹ 1 Sales volume² ('000 MT) 1,070 1,048 (2)% Revenue ($) 4,070 4,134 2% Gross profit ($) 1,154 1,067 (8)% Strong performance in our consumer business in Chile, offset by; Gross margin (%) 28.4% 25.8% Operating expenses ($) (843) (862) (2)% Other³ ($) (1) (63) Normalised EBIT4 ($) 310 142 (54)% · Includes EBIT attribution (13) from Group Operations5 ($) Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. Comparative information includes re-presentations for consistency with the current period 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other channels 3. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 4. Includes EBIT attribution from Group Operations • . weaker market conditions, particularly in South East Asia and Sri Lanka Operating expenses up due to impairment of some of our Asia brands 'Other' includes $(80) million adverse revaluation of the Sri Lankan business payables due to devaluation of the rupee Favourable change in Group Operations attribution due to improved margins in our protein portfolio, such as skim milk powder 5. Included in normalised Consumer's EBIT. Refer to Glossary for explanation of Group Operations 6. The impairment includes a $22 million impairment of Anlene, an $11 million impairment of Anmum and a $1 million impairment of Chesdale, with the carrying amount of these brands now at $336 million as at 31 July 2022. Our Asia brands also include Anchor which was not impaired 38#39Group performance by region Asia Pacific Volume ('000 MT) 1,370 From 1,386 Revenue ($ million) 7,879 From 7,110 ✦ Gross margin 15.6% From 16.8% AMENA Volume ('000 MT) 1,355 From 1,352 Revenue ($ million) 8,612 From 7,304 Gross margin 13.2% From 12.4% ↑ Greater China Volume ('000 MT) 1,029 From 1,176 Revenue ($ million) 6,660 From 6,312 ↑ Gross margin 13.0% From 13.2% $ million ■2021 2022 1,195 1,227 305 237 Gross profit EBIT Fonterra Dairy for life 1,137 904 836 866 527 336 403 432 Gross profit EBIT Gross profit EBIT Note: Figures are for the year ended 31 July. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. 39#40Asia Pacific million 2021 2022 %A¹ Sales volume² ('000 MT) 1,386 1,370 (1)% Revenue ($) 7,110 7,879 11% Gross profit ($) 1,195 1,227 3% • Gross margin (%) 16.8% 15.6% Operating expenses ($) (889) (941) (6)% Other³ ($) (1) (49) Normalised EBIT4 ($) 305 237 (22)% Includes EBIT attribution from Group Operations5 ($) EBIT by Quarter (3) 67 ($ million) ■2021 2022 145 91 81 77 73 19 60 (4) Q1 Q2 Q3 Q4 Fonterra Dairy for life • Improved Ingredients gross margin more than offset by lower Foodservice and Consumer gross margins: Ingredients channel benefited from higher product prices improving gross profit o lower gross margins in Foodservice and Consumer channels due to higher cost of milk Other' includes $(80) million adverse revaluation of the Sri Lankan business payables due to devaluation of the rupee Increased EBIT attribution from Group Operations mainly driven by improved margin in our protein portfolio and bulk liquids Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other segments 3. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 4. Includes EBIT attribution from Group Operations 5. Included in Asia Pacific's normalised EBIT. Refer to Glossary for explanation of Group Operations 40#41Asia Pacific channel performance Ingredients Volume ('000 MT) 605 From 610 Revenue ($ million) 4,325 From 3,654 ↑ Gross margin 10.6% From 7.4% ↑ Foodservice Volume ('000 MT) 177 From 163 Revenue ($ million) 1,079 From 930 Gross margin 12.1% From 23.4% Consumer Volume ('000 MT) 588 From 613 Revenue ($ million) 2,475 From 2,526 Gross margin 25.7% From 27.9% $ million ■2021 ■2022 459 272 24 192 Gross profit EBIT 218 79 131 (13) Gross profit EBIT 705 637 Gross profit Fonterra Dairy for life 202 58 EBIT Note: Figures are for the year ended 31 July. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. Comparative information includes re-presentations for consistency with the current period 41#42Australia million 2021 2022 %A¹ Milk collections (kgMS) 106 106 Sales volume² ('000 MT) 373 365 (2)% • Revenue ($) 1,953 2,094 7% • Gross profit ($) 243 283 16% Gross margin (%) 12.4% 13.5% Operating expenses ($) (167) (178) (7)% Other³ ($) (2) 1 Normalised EBIT ($) 74 106 43% Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. This table was prepared exclusive of Group Operations attribution 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other segments 3. Consists of other operating income and net foreign exchange gains/(losses) Fonterra Dairy for life Milk collections were stable, with improved market share offset by labour shortages, and on-farm input costs and availability Improved gross profit due to: o Ingredients channel benefited from the broad strengthening of product prices and a weaker Australian dollar, partially offset by; o higher input costs impacted gross margins in Consumer and Foodservice channels EBIT increased $32 million to $106 million, mainly due to an increase in gross profit 42#43AMENA Fonterra Dairy for life million 2021 2022 %A¹ 1 Sales volume² ('000 MT) 1,352 1,355 Revenue ($) 7.304 8,612 18% Gross profit ($) 904 1,137 26% • Gross margin (%) 12.4% 13.2% Operating expenses ($) (605) (674) (11)% Other³ ($) 37 64 73% Normalised EBIT4 ($) 336 527 57% Includes EBIT attribution (99) 70 from Group Operations ($) EBIT by Quarter 194 2021 2022 ($ million) 156 131 113 121 69 56 23 ● Increased gross profit due to improved pricing and product mix in the Ingredients channel, particularly in our protein portfolio, partially offset by; 。 tighter margins in Foodservice and Consumer channels Operating expenses up, impacted by increased storage and distribution costs Increased EBIT attribution from Group Operations driven mainly by strong casein, milk protein concentrate and whey protein concentrate margins Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other segments 3. Consists of other operating income, net foreign exchange gains/(losses) and share profit or loss on of equity accounted investees Q1 Q2 Q3 4. Includes EBIT attribution from Group Operations Q4 5. Included in AMENA's normalised EBIT. Refer to Glossary for explanation of Group Operations 43#44AMENA channel performance Ingredients Volume ('000 MT) 895 From 912 Revenue ($ million) 6,899 From 5,784 ↑ Gross margin 11.4% From 9.2% ↑ Foodservice Volume ('000 MT) 73 From 61 ✶ Revenue ($ million) 411 From 338 Gross margin 7.3% From 12.4% Consumer Volume ('000 MT) 387 From 379 ✶ Revenue ($ million) 1,302 From 1,182 Gross margin 24.7% From 27.7% $ million 2021 ■2022 786 534 Fonterra Dairy for life 442 328 321 89 211 42 30 15 (4) 110 Gross profit EBIT Gross profit EBIT Gross profit EBIT Note: Figures are for the year ended 31 July. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations 44#45Latin America million 2021 2022 %A¹ Sales volume² ('000 MT) 379 388 2% Revenue ($) 1,045 1,131 8% Gross profit ($) 285 309 8% • Gross margin (%) 27.3% 27.3% • Operating expenses ($) (211) (217) (3)% Other³ ($) 1 Normalised EBIT ($) 75 92 23% Fonterra Dairy for life • Sales volumes growth mainly driven by Chilean government stimulus Improved gross profit driven by our consumer business in Chile, due to: 。 sales volume growth of higher margin products - such as yoghurt and desserts ability to leverage our number one market share position and lift in-market prices Operating expenses increased to support higher sales volumes and higher supply chain costs Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. This table was prepared exclusive of Group Operations attribution 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other segments 3. Consists of other operating income and net foreign exchange gains/(losses) 445#46Greater China million 2021 2022 %A¹ 1 Sales volume² ('000 MT) 1,176 1,029 (13)% Revenue ($) 6,312 6,660 6% Gross profit ($) 836 866 4% Gross margin (%) 13.2% 13.0% • Operating expenses ($) (436) (464) (6)% Other³ ($) 3 30 Normalised EBIT4 ($) 403 432 7% Includes EBIT attribution from Group Operations5 ($) EBIT by Quarter (16) 52 Fonterra Dairy for life • Lower sales volumes impacted by lower milk collections over the first nine months of FY22 and shipping disruptions Increased gross profit driven by: strong Ingredients performance, due to improved pricing, particularly in our protein portfolio, partially offset by; 。 higher input costs and lower sales volumes in Foodservice and Consumer Increased EBIT attribution from Group Operations due to strong protein portfolio margins ($ million) ■2021 2022 193 150 101 115 86 88 81 21 Note: Figures are for the year ended 31 July and are on a normalised continuing operations basis. 1. Percentages as shown in the table may not align to the calculation of percentages based on numbers in the table due to rounding of figures 2. Includes sales to other segments 3. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 4. Includes EBIT attribution from Group Operations Q1 Q2 Q3 Q4 5. Included in Greater China's normalised EBIT. Refer to Glossary for explanation of Group Operations 46#47Greater China channel performance Ingredients Volume ('000 MT) 697 From 824 Revenue ($ million) 4,479 From 4,259 Gross margin 9.8% From 7.0% Foodservice Volume ('000 MT) 259 From 274 Revenue ($ million) 1,824 From 1,691 ↑ Gross margin 17.4% From 24.7% Consumer Volume ('000 MT) 73 From 78↓ Revenue ($ million) 357 From 362 Gross margin 30.5% From 33.4% $ million ■2021 ■2022 439 417 318 298 282 275 130 155 Gross profit EBIT Gross profit EBIT Note: Figures are for the year ended 31 July. Does not add to Total Group as shown on a normalised continuing operations basis and excludes unallocated costs and eliminations. Fonterra Dairy for life 121 109 (2) Gross profit EBIT (5) 47#48New Zealand and Non-New Zealand Milk Fonterra Dairy for life 31 July 2021 31 July 2022 New Zealand Non-New NZD million¹ Milk Zealand Milk Total New Zealand Milk Non-New Zealand Milk Total Revenue 17,331 3,234 20,565 19,466 3,487 22,953 Cost of goods sold (14,844) (2,737) (17,581) (16,794) (2,943) (19,737) Gross profit 2,487 497 2,984 2,672 544 3,216 Gross margin 14.4% 15.4% 14.5% 13.7% 15.6% 14.0% Operating expenses (1,752) (401) (2,153) (1,910) (374) (2,284) Other² 56 9 65 43 7 50 Normalised EBIT 791 105 896 805 177 982 EBIT margin 4.6% 3.2% 4.4% 4.1% 5.1% 4.3% 1. Figures are for the year ended 31 July and are prepared on a normalised continuing operations basis 2. Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss on equity accounted investees 48 188#49Good progress on our strategic choices G Focus on Aotearoa New Zealand Milk FY21 FY22 Higher allocation of milk solids to: Foodservice through innovation of our UHT cream portfolio Active Living through partnership with key medical nutrition customers 12.0% 5.3% 13.0% 5.9% Be a leader in dairy innovation & science Increased R&D expenditure $110m $115m² Entered into a strategic partnership with VitaKey Be a leader in Sustainability • Reduced water use at manufacturing sites in water constrained regions Made progress toward exiting coal 2.6% 6.6%³ 1. As a percentage of our total New Zealand milk solids (kgMS) 2. Research and development costs 3. Reduction in water usage relative to FY18 49 49#50FY22 progress against our aspirational financial profile FY20 | Actual FY21 | FY22 Actual Forecast FY22 Actual FY24 Year 3 Target FY27 Year 6 Target FY30 Year 9 Target Improved performance Milk Price per kgMS $7.14 $7.54 $9.30 Normalised EBIT $879m $952m Earnings per share 24c 34c Return on capital 6.6% 6.6% $875- $975m 25-40c i 6.5-7.0% $991m $1,025-$1,125m 35c 6.8% 45-55c 7.0-8.0% $1,150- $1,250m 50-60c 7.5-8.5% $1,325- $1,425m 55-65c 9.0-10.0% Financial position Capital investment $525m $608m | $650m $617m $980m $980m $980m Debt to EBITDA ratio 3.3x 2.7x | 2.4x* 3.2x <2.5x <2.5x <2.5x Gearing ratio 44% 39% 35%* 42% <35% <35% <35% Dividend to shareholders Dividends per share 5c 20c 15-20c 20c 22-27c 30-35c 40-45c *Calculated using an EPS of 35 cents Fonterra Dairy for life Note: The figures in this table which relate to dates in the future are targets we are aiming to achieve only. They should not be taken as forecasts or as a guarantee of returns to shareholders. The target years assume long-term average levels of price relativity and lag pricing impacts, and individual years are likely to vary from this assumption. Please refer to the important cautions and disclaimer at the back of this document and the key assumptions and risks in the Appendix of the booklet titled Our Path to 2030 for further details. 50#512022 Board Statement of Intentions In accordance with the Constitution of Fonterra, the Board Statement of Intentions sets out the Board's intentions for the performance and operations of Fonterra. The table below provides an update of Fonterra's performance against these targets for the year ended 31 July 2022. Healthy People Total recordable injury frequency rate (TRIFR) per million work hours Female representation in senior leadership Employee engagement Farmer sentiment (Net Promoter Score for Fonterra in New Zealand) Healthy Environment Number of farms with Farm Environment Plans (New Zealand) Reduction in water used at sites in water-constrained regions versus FY18 Reduction in greenhouse gas emissions from manufacturing versus FY18 Healthy Business Fonterra % kgMS of New Zealand milk collected for the season ended 31 May New Zealand Farmgate Milk Price (per kgMS) Return on capital Debt/EBITDA Adjusted Net Debt Gearing Ratio Normalised earnings per share Fonterra Dairy for life FY21 FY22 SOI FY22 5.7 32.4% 4.09 5.6 35.8% 6.7 34.8% Top Quartile 23 30 25 53% 67% 71% (2.6)% (8.0)% (6.6)% (6.5)% (6.6)% (11.2)% 79.0% 79.3% 79.1%4 $7.54 $7.25-$8.75 $9.30 6.6% 6.5% to 7.0% 6.8% 2.7x 2.4x 3.2x5 38.5% 34.5% 42.4%5 34c 25c to 40c 35c 1. Part of zero harm philosophy which also includes target 0 serious harm/0 fatalities 2. Senior leadership defined as Band 14+ 4. F22 Season to 31 May 2022. Prior comparable season to 31 May 2021: 79.0%. 5. 3. Due to management review of the provider and means of determining engagement, measurement of this metric was not completed during the FY22 financial year. Colour reflects performance relative to target and prior year. Both metrics remain below the maximum ratio of 3.75x and 45%.#52FY23 Integrated Scorecard Fonterra Dairy for life People Providing a safe, healthy and inclusive place to work. Able to attract and retain the best talent in the world. Continuously developing people's skills for meaningful careers within the ever-changing nature of work. Nature Leading the transition to net-zero GHG emissions for dairy nutrition. Demonstrating that dairy can be a net-positive contributor to nature. Relationships (Farmers, customers, New Zealand, consumer, government etc.) Strong relationships with customers and consumers through the provision of high-quality, innovative products and services and sustainability credentials. Processor of choice for farmers through competitive returns on their investment and value-adding support and services. Trusted relationships with stakeholders, playing our part for positive social, environmental and economic outcomes that are recognised by New Zealanders. Intellectual Capital (What we know) Leveraging our IP to deliver extra value for the Co-op. Assets & Infrastructure (How we do dairy) Operational assets are resilient and can efficiently deliver our most valuable portfolio of products and services, with an ever-decreasing environmental footprint. Financial (Our Performance) Consistently attractive for farmers to be members of the Co-op, both as suppliers and shareholders. Key Metrics People Serious harm Gender diversity (Band 12+) Nature GHG emissions (Scope 1,2) FY21 FY22 FY23 Scorecard 9 8 5 36.3% 37.6% 38.8% (6.6)% (11.2)% (10.6)% FEP adoption 53% 71% 84% (New Zealand) Water Improvement Plans in place 37.5% (18 sites) Relationships Share of New Zealand milk collected 79.0% 79.1% 79.0% Intellectual Capital EBIT from New Zealand value-add businesses ($ million) Assets & Infrastructure Cost of quality (% of cost of goods sold) Return on capital Financial Farmgate Milk Price ($) 1. Relative to FY18 Baseline. Long-term will include Scope 3 but for now Scope 1&2 including farms under our operational control 2. EBIT consists of Consumer, Foodservice, Active Living excluding Brazil, Australia and Chile 616 307 388 0.45% 0.44% 0.35% 6.6% 6.8% 7.0% to 7.5% 7.54 9.30 $9.503 3. The latest announced Forecast Farmgate Milk Price range is $8.50-$10.00 per kgMS, with a mid-point of $9.25 per kgMS (26 August 2022)#53Glossary Fonterra Dairy for life Active Living Represents ingredients & solutions sold to businesses who cater to consumers' health and wellness needs. It addresses three dimensions of wellbeing (Physical, Mental, Inner), extending to meet the nutrition needs of medical patients through to everyday people pursuing active lifestyles. This portfolio includes proteins, specialty ingredients such as probiotics, lactoferrin & lipids, and patented formulations Asia Pacific Represents the Ingredients, Foodservice and Consumer channels in New Zealand, Australia, Pacific Islands, South East Asia and South Asia AMENA Represents the Ingredients, Foodservice and Consumer channels in Africa, Middle East, Europe, North Asia and Americas Capital expenditure Capital expenditure comprises purchases of property (less specific disposals where there is an obligation to repurchase), plant and equipment and intangible assets (excluding purchases of emissions units), net purchases of livestock, and includes amounts relating to disposal groups held for sale Capital invested Comprises capital expenditure plus right-of-use asset additions and business acquisitions, including equity contributions, long-term advances, and investments Consumer Represents the channel of branded consumer products, such as powders, yoghurts, milk, butter and cheese Debt/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 and net foreign exchange gains/losses Earnings before interest and tax (EBIT) Is profit before net finance costs and tax Farmgate Milk Price Means the average price paid by Fonterra for each kilogram of milk solids (kgMS) supplied by Fonterra's farmer shareholders under Fonterra's standard terms of supply. The season refers to the 12-month milk season of 1 June to 31 May. The Farmgate Milk Price is set by the Board, based on the recommendation of the Milk Price Panel. In making that recommendation, the Panel provides assurance to the Board that the Farmgate Milk Price has been calculated in accordance with the Farmgate Milk Price Manual Foodservice Represents the channel selling to businesses that cater for out-of-home consumption; restaurants, hotels, cafes, airports, catering companies etc. The focus is on customers such as; bakeries, cafes, Italian restaurants, and global quick-service restaurant chains. High performance dairy ingredients including whipping creams, mozzarella, cream cheese and butter sheets, are sold in alongside our business solutions under the Anchor Food Professionals brand Free cash flow Is the total of net cash flows from operating activities and net cash flows from investing activities 53#54Glossary Gearing ratio (adjusted net debt) Is adjusted net debt divided by total capital. Total capital is equity excluding hedge reserves, plus adjusted net debt Greater China Represents the Ingredients, Foodservice and Consumer channels in Greater China, and the Falcon China Farms JV Group Operations Comprises functions under the Chief Operating Office (COO) including New Zealand milk collection and processing operations and assets, supply chain, Group IT, Sustainability and Innovation; Fonterra Farm Source TM retail stores; and the Central Portfolio Management function (CPM) Ingredients Represents the channel comprising bulk and specialty dairy products such as milk powders, dairy fats, cheese and proteins manufactured in New Zealand, Australia, Europe and Latin America, or sourced through our global network, and sold to food producers and distributors kgMS Means kilograms of milk solids, the measure of the amount of fat and protein in the milk supplied to Fonterra Net debt (adjusted) Fonterra Dairy for life 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 Normalised earnings per share (EPS) Normalised earnings per share is calculated as normalised profit after tax attributed to equity holders of the Co-operative divided by the weighted average number of shares on issue for the period Return on capital Is Total Group normalised EBIT including finance income on long-term advances less a notional tax charge, divided by average capital employed Season New Zealand: A period of 12 months from 1 June to 31 May Australia: A period of 12 months from 1 July to 30 June Chile: A period of 12 months from 1 August to 31 July Unallocated costs and eliminations Represents corporate costs including Co-operative Affairs and Group Functions; and any other costs that are not directly associated to the reporting segments; and eliminations of inter-segment transactions 54#55Important information and disclaimer This presentation may contain forward-looking statements, financial targets and ambitions ("Forward Statements"), each of which is based on a range of assumptions, including (in the case of our 2030 strategy) the assumptions noted in the Appendix of the booklet titled Our Path to 2030 which is available on our website. None of the Forward Statements is intended as a forecast, estimate or projection of the outcome that will, or is likely to, eventuate. They should not be taken as forecasts or a guarantee of returns to shareholders. There can be no certainty of outcome in relation to the matters to which the Forward Statements relate. Our ability to achieve the outcomes described in the Forward Statements is subject to a number of assumptions, each of which could cause the actual outcomes to be materially different from the events or results expressed or implied by such Forward Statements. The Forward Statements also involve known and unknown risks, uncertainties and other important factors that could cause the actual outcomes to be materially different from the events or results expressed or implied by such Forward Statements. Those risks, uncertainties, assumptions and other important factors are not all within the control of Fonterra Co-operative Group Limited ("Fonterra") and its subsidiaries (the "Fonterra Group") and cannot be predicted by the Fonterra Group. The Forward Statements in this presentation reflect views held only at the date of this presentation. While all reasonable care has been taken in the preparation of this presentation, none of Fonterra, the Fonterra Group, or any of their respective subsidiaries, affiliates and associated companies (or any of their respective officers, employees or agents) (together "Relevant Persons”) makes any representation or gives any assurance or guarantee as to the accuracy or completeness of any information in this presentation or the likelihood of fulfilment of any Forward Statement or any outcomes expressed or implied in any Forward Statement. Accordingly, to the maximum extent permitted by law, none of the Relevant Persons accepts any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of any Forward Statements or for any loss, howsoever arising, from the use of this presentation. Statements about past performance are not necessarily indicative of future performance. Except to the extent (if any) as required by applicable law or any applicable Listing Rules (including the Fonterra Shareholders' Market Rules), the Relevant Persons disclaim any obligation or undertaking to update any information in this presentation. This presentation does not constitute investment advice or opinions, or an inducement, recommendation or offer to buy or sell any securities in Fonterra or the Fonterra Shareholders' Fund. Fonterra Dairy for life 55#56Non-GAAP Measures Fonterra Dairy for life Fonterra uses several non-GAAP measures when discussing financial performance. Non-GAAP measures are not defined or specified by NZ IFRS. Management believes that these measures provide useful information as they provide valuable insight on the underlying performance of the business. They may be used internally to evaluate the underlying performance of business units and to analyse trends. These measures are not uniformly defined or utilised by all companies. Accordingly, these measures may not be comparable with similarly titled measures used by other companies. Non-GAAP financial measures should not be viewed in isolation nor considered as a substitute for measures reported in accordance with NZ IFRS. Non-GAAP measures are not subject to audit unless they are included in Fonterra's audited annual financial statements. Please refer to the Non-GAAP Measures section in Fonterra's 2022 Annual Review for further information about non-GAAP measures used by Fonterra, including reconciliations back to NZ IFRS measures. Definitions of non-GAAP measures used by Fonterra can be found in the Glossary. 56 56