Fonterra Shareholders' Fund/Announcement

Fonterra reports continued strong performance in FY25

Full Year Results24 September 2025FSFConsumer Staples

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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 12 months to 31/07/2025
Previous Reporting Period 12 months to 31/07/2024
Currency NZD
Amount (000s) Percentage change
Revenue from continuing operations $24,111,000 18%
Total Revenue $26,450,000 15%
Net profit from continuing operations $1,004,000 (4%)
Total net profit $1,079,000 (4%)
Final Dividend
Amount per Quoted Equity Security $0.3500
Imputed amount per Quoted Equity Security $0.1361
Record Date 02/10/2025
Dividend Payment Date 15/10/2025
Current period Prior comparable period
Net tangible assets per Quoted Equity
Security
$4.10 $3.97
A brief explanation of any of the figures
above necessary to enable the figures to be
understood
The negative percentage change presented above, for net
profit from continuing operations and total net profit, reflects
an increase in tax expense. Tax expense has increased
because of the election not to take a deduction for
distributions to farmer shareholders.
Profit before tax from continuing operations and total profit
before tax is up by 16% and 13%.
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 25/09/2025
Audited financial statements accompany this announcement.

---

25 September 2025

Fonterra reports continued strong performance in FY25

• Total Group revenue: NZ $26 billion, up 15%
• Total cash returns to shareholders: $16 billion, up 30.6%
• Operating profit: NZ $1,732 million, up 13%
• Profit after tax: NZ $1,079 million, down 4%, up 13% tax-adjusted
• Normalised earnings per share: 71 cents, no change, up 13 cents tax-adjusted
• FY25 full year dividend, fully imputed: 57 cents per share, up from 55 cents unimputed
• Return on Capital: 10.9%, down from 11.3%, up from 10.0% tax-adjusted
• 2024/25 final Farmgate Milk Price: NZ $10.16 per kgMS
• 2024/25 season milk collections: 1,509 million kgMS, up 2.6%

• 2025/26 forecast Farmgate Milk Price range: NZ $9.00 – $11.00 per kgMS
• FY26 forecast earnings range: 45-65 cents per share
• 2025/26 season forecast milk collections: revised up to 1,525 million kgMS

Fonterra Co-operative Group Ltd has today released its FY25 annual results which show the Co-
op generated $26 billion in revenue and delivered $16.2 billion in total cash returns to
shareholders.

The final Farmgate Milk Price for the 2024/25 season was $10.16 per kgMS, equating to $15.3
billion in milk payments to New Zealand farmers, up $3.8 billion on last year.

The Co-op also announced a FY25 full year dividend of 57 cents fully imputed, and at the upper
end of its dividend policy, equating to $916 million of cash to shareholders and unit holders. This is
comprised of a 22 cent interim dividend and 35 cent final dividend.

CEO Miles Hurrell says FY25 has been one of the Co-op’s strongest years yet in terms of
shareholder returns.

“We continue to see good demand from global customers for our high-quality products made from
New Zealand farmers’ milk and this is driving returns through both the Farmgate Milk Price and
dividends.

“Our vision is to be the source of the world’s most valued dairy. Our strategy is designed to grow
end-to-end value for farmers by focusing on being a B2B dairy nutrition provider, working closely
with customers through our high-performing Ingredients and Foodservice channels.

“During the year, we’ve taken important steps towards this goal, including running a robust
divestment process for global Consumer and associated businesses. This resulted in an
agreement to sell the businesses to Lactalis for $4.22 billion, subject to approvals.

Fonterra Co-operative Group
Page 2

“We’re also positioning the Co-op to deliver further value through our Foodservice and Ingredients
businesses, including continuing to invest in new manufacturing capability to meet growing
customer demand for our high-value products.

“We have a pipeline of potential growth investments we’re assessing, with plans to invest up to $1
billion over the next three to four years in projects to generate further value and drive operational
cost efficiencies,” says Mr Hurrell.

Projects include:
• Growing the value of our existing protein portfolio, in addition to the recently announced
investment at Studholme, to support our Ingredients business.
• Adding value to milkfat through new butter and cream cheese investments to support both our
Foodservice and Ingredients businesses.
• Investments in site operations including our Enterprise Resource Planning system
replacement, data, AI and automation.

Mr Hurrell says that through focused execution of strategy, the Co-op is targeting earnings to be
back at current levels within three years, offsetting the earnings impact of divesting the Consumer
and associated businesses.

“Our balance sheet strength gives us the confidence to return capital, invest in the future of the
business and maintain our dividend policy,” says Mr Hurrell.

Performance

Fonterra has delivered strong performance in FY25, with Total Group reported operating profit
increasing to $1.7 billion, up from $1.5 billion the year prior.

Reported profit after tax was $1.1 billion, equivalent to earnings per share of 65 cents. This was
down slightly on the prior year, reflecting Fonterra’s higher tax expense in FY25 after the Co-op
elected not to deduct distributions to farmer shareholders from taxable income and instead attach
imputation credits to dividends.

When excluding the costs associated with the Consumer divestment, Fonterra’s normalised
earnings per share were 71 cents, in line with last year’s result.

The Co-op delivered a Return on Capital of 10.9%, in line with the target range of 10-12%.

“This result was driven by higher operating profit in the Ingredients business, due to demand for
our protein portfolio and our use of margin hedging tools and indexed-based pricing,” says Mr
Hurrell.

“Foodservice sales volumes continue to grow off the back of continued demand in Greater China
for our high-value products including UHT cream, butter and mozzarella.

“The business proposed to be divested, Mainland Group, benefited from sales volume growth in
the Consumer business and the Australia business having a stable milk price against higher global
commodity prices.

“Operating costs largely increased due to investment in a once-in-a-generation Enterprise
Resource Planning software replacement as well as costs associated with the Consumer
divestment process.

“Fonterra’s balance sheet and leverage metrics are in line with the prior year, maintaining the Co-
op’s robust position and providing optionality for the future,” says Mr Hurrell.

Strategy

Fonterra Co-operative Group
Page 3

During FY25, Fonterra took further steps to support value growth through its global Ingredients and
Foodservice businesses.

This included appointing Richard Allen as President, Global Ingredients and Teh-han Chow as
President, Global Foodservice.

“Fonterra commenced construction on new manufacturing capacity at its Studholme and Edendale
sites, with the first protein products from Studholme expected in early 2026, and UHT cream from
Edendale expected late 2026,” says Mr Hurrell.

“The Co-op is also investing in its foundations, with construction underway on a new coolstore at
its Whareroa site, and new coal-free boilers at its Clandeboye and Edendale sites to support
secure energy supply.

“In addition to the investments at Studholme and Edendale, we’re also planning new
manufacturing capacity investment for both specialty protein and butter. This will support further
improvement in the Co-op’s product mix by allowing Fonterra to allocate more milk to Foodservice
and non-reference Ingredients products,” says Mr Hurrell.

Divestment

In line with its strategy to focus on its Ingredients and Foodservice businesses, during FY25
Fonterra undertook a dual-track divestment process for its global Consumer and associated
businesses.

This resulted in an announcement in August 2025 that the Co-op has agreed to sell the businesses
to Lactalis for $4.22 billion, subject to approvals.

As previously shared, Fonterra is targeting a capital return of $2.00 per share from the divestment
proceeds if it progresses, which is equivalent to $3.2 billion.

The Fonterra Board intends to make a final decision on the amount and timing of the capital return
once the sale agreement is unconditional, cash proceeds are received in New Zealand and having
regard to other relevant factors including Fonterra's debt and earnings outlook at the time.

The sale is subject to approval from farmer shareholders, certain regulatory approvals, and
separation of the businesses from Fonterra. The farmer shareholder vote is due to take place via a
Special Meeting on 30 October 2025.

Outlook

The Co-op has today revised its forecast milk collections for the 2025/26 season from 1,490 million
kgMS to 1,525 million kgMS.

“Favourable weather conditions experienced during the previous season are forecast to continue
through spring, supporting pasture growth,” says Mr Hurrell.

The 2025/26 forecast Farmgate Milk Price is $10.00 per kgMS with a range of $9.00 - $11.00 per
kgMS.

“Global Dairy Trade prices continue to be robust, as does demand from customers for our products
sold off GDT. However, the risk of potential volatility in commodity prices and exchange rates from
geopolitical dynamics remains.”

Fonterra’s FY26 forecast earnings from continuing operations, which excludes the businesses to
be divested, is 45-65 cents per share.

Fonterra Co-operative Group
Page 4

“Our forecast earnings for the year ahead exclude earnings from the businesses to be divested
and is in line with the strong performance we’ve delivered in FY25.”

Looking further ahead, as well as targeting earnings to return to current levels in three years,
Fonterra has confirmed it is maintaining the strategic targets and policy settings announced in
September 2024, if Mainland Group is divested.

This includes a target average Return on Capital of 10-12% from FY26, which is above Fonterra’s
5-year average.

We have amended our Debt to EBITDA target to less than 3 times and maintained our target
gearing ratio of 30-40%, reflecting an appetite to maintain conservative balance sheet settings.

While there are always risks that may impact future performance, Fonterra continues to target
dividend payments within its policy range of 60%-80% of earnings in the medium term.

“Our ongoing balance sheet strength, combined with our focused strategic direction, means the
Co-op is well prepared for the future and positioned to continue delivering positive returns to
shareholders,” 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

---

Fonterra Co-operative Group
2025 Annual Results

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.
Anyestimatesorprojectionsastoeventsthatmayoccurinthefuture(includingEBITDAF,revenue,profit,underlyingprofit,dividends,margin,expenses,earnings,assets,liabilitiesand
performance)arebaseduponthebestjudgementofFonterrafromtheinformationavailableasofthedateofthispresentation.Anumberoffactorscouldcauseactualresultsor
performancetovarymateriallyfromtheestimatesorprojections.Noperson(includingFonterraanditsdirectors,officers,employeesandadvisers)givesormakesanyrepresentation,
warranty,assuranceorguaranteethattheoccurrenceoftheeventsexpressedorimpliedinanyforwardlookingstatementsinthispresentationwillactuallyoccuror,excepttotheextent
(ifany)requiredbyapplicablelaworanyapplicableListingRules,assumesanyobligationtoprovideanyadditionalinformationorupdatetheseforwardlookingstatementsforeventsor
circumstancesthatoccursubsequenttothedateofthispresentation.Norelianceshouldbeplacedonanyforwardlookingstatements.
Not financial advice
Thispresentationdoesnottakeintoaccounttheindividualinvestmentobjectives,financialsituationorneedsofanyshareholder.Shareholdersmustmaketheirowndecisionsandseek
theirownadviceinthisregard.Theinformationcontainedinthispresentationdoesnotconstitute,andshouldnotbetakenasconstituting,financialadvice,financialproductadvice,
investmentadvice,taxadviceorlegaladvice.Inparticular,thispresentationdoesnotconstitutearecommendationoroffertobuyorsellsecuritiesinFonterraortheFonterra
Shareholders’Fund.
Important Cautions and Disclaimer
2

Content
Results overview and divestment4-21
Key financial drivers of strategy22-30
Additional performance information31-45
FY24 & FY25 pro forma Fonterra and
Mainland financials
46-61
Scorecard and Glossary62-67

Continued strong
performance in FY25
•$16.2b in payments generated in FY25, up $3.8b on prior year
•$15.3b in milk payments or $10.16 per kgMS
•$916m in imputed dividends or 57 cents per share
•equivalent to a total payout of $10.73 on average for supplying shareholders¹
•Operating profit $1.7b, up $205m due to strong Ingredients’ margins and
favourable hedging in the Non-Reference portfolio
•Profit after tax $1.0b, down $49m reflecting change in tax treatment
2
, and includes
$106m of divestment and separation costs
•excluding divestment costs, earnings per share of 71c, in line with prior year
•Agreement to sell Mainland Group to Lactalis for $4.22b
•targeting capital return of $2.00 per share if sale progresses, equivalent
to $3.2b
•Return on capital of 10.9%, from 11.3%. Adjusting for tax treatment change FY25
return on capital is 12.5%
•Net debt and leverage metrics in line with prior year reflecting strong cash
earnings supporting increased dividends
•Maintained 2025/26 Farmgate Milk Price range of $9.00 – $11.00 per kgMS
•FY26 continuing operations earnings range of 45 – 65 cents per share
1.For a supplying shareholder who holds one share per kgMS supplied
2.Fonterra has exhausted its NZ tax losses and NZ tax expenses will generate imputation credits from FY25 onwards.
As part of the change, dividends on supply backed shares are no longer treated as tax deductible by Fonterra
4

Results at a glance
Reported
profit after tax
$1,079m
 from 1,128m
Reported
operating profit
$1,732m
 from 1,527m
Return on capital
10.9%
Dividend
57cents imputed
 from 55c unimputed
5
Normalised
earnings per share
71cents
Farmgate Milk Price
$10.16
 from $7.83
Reported
earnings per share
65cents
 from 67c
 from 9.9% tax adjusted
 from 11.3% unadjusted
 from 58c tax adjusted
no change unadjusted

1.0
1.0
2.2
1.5
1.7
34
35
80
7171
20212022202320242025
4.3
5.3
3.2
2.62.6
39%
42%
29%
24%
24%
20212022202320242025
7.54
9.30
8.22
7.83
10.16
7.74
9.50
8.72
8.38
10.73
20212022202320242025
Momentum from uplift in performance continues
Operating profit
Earnings per share
Net debt
Gearing
Normalised EPS (cents)
Reported operating profit ($b)
Gearing
Net debt ($b)
Return on capital
Dividends
Total
Payout
Milk Price ($)
Return on capital (RoC)
Cash Dividends (cents)
2020
50
55
57
22
6.6%
6.8%
12.4%
11.3%
10.9%
12.5%
20212022202320242025
Imputation Credits (cents)
RoC adjusted for tax change
Includes
Soprole $0.35b
gain on sale
Total Payout ($)
6

1,194
163
27
(254)
551,185
FY24
Total Group
profit after tax
IngredientsFoodserviceNet finance costs
& tax
Mainland
& other
discontinued operations²
FY25
Total Group
profit after tax
Operating Profit
$190 
Higher operating profit offset by tax change
FY24 to FY25 normalised profit after tax¹
($ million)
7
71c EPS71c EPS
$216m due to change in tax treatment
and will be attached as imputation credits
Volume growth in UHT cream,
butter and mozzarella
Improved margins and
product mix
Improved Australia business
performance and Consumer
business sales volume growth
Note: For the year ended 31 July. Profit after tax presented in the graph includes profit attributable to non-controlling interests. EPS presented is for profit attributable to equity holders of the Co-operative
1.FY25 normalisations of $106m relating to Mainland Group divestment and separation costs (FY24 of $(66)m in relation to the sale of DPA Brazil)
2.Includes $8m post-tax profit in relation to Soprole

46%
47%
44%
43%
33%
33%
34%
33%
13%13%
14%
16%
8%
7%
8%
8%
2022202320242025
Milk PriceAdvanced & SpecialtyFoodserviceConsumer
8
Why divest Mainland?
5%
5%
5%
5%
15%
32%
16%
19%
6%
16%
20%
12%
(0%)
(4%)
7%
9%
Channel performance
Channel allocation of milk solids
79%
80%
78%
76%
Return on Capital
Advanced & Specialty
Foodservice
Consumer
Milk Price
Ingredients¹
•Fonterra’s Ingredients business generates the Farmgate
Milk Price and, alongside Foodservice, contributes the
majority of the Co-op’s earnings
•A divestment of Mainland would allow Fonterra to focus on
what it does best – being a B2B provider of dairy to the
world, from our home base in New Zealand

•Farmers’ capital invested into the consumer business
comes at the expense of options for our Ingredients and
Foodservice businesses
•Lactalis identified significant potential in the Mainland
Business and its brands and considers it has the
experience and global scale required to take them to the
next level
1.Ingredients’ Advanced & Specialty Return on Capital is calculated from the total Ingredients channel Return on Capital, adjusting for the portion of volumes that earn the weighted average cost of capital (Regulated Return) as calculated in the Milk
Price Manual, presented in the chart as ‘Milk Price’

Divestment Proposal
•Lactalis to purchase:
•Consumer business (excluding Greater China)
•Integrated businesses in Oceania and Sri Lanka
•Middle East & Africa Foodservice business
9
Purchase Price
$4.22b
Proposed Tax-Free Capital Return
$2.00per share
Shareholder Vote
30 Oct
Key terms of sale agreement
•Includes long term agreements for milk supply, ingredients and other products to
the divested business
•Sale is subject to separation of the business from Fonterra and approval from:
•Fonterra shareholders by ordinary resolution
•OIO in New Zealand, FIRB in Australia and certain
competition authorities

How we create end-to-end value for farmers
10

Our Strategy
11

Unleashing our Ingredients engine
•One of the largest product ranges in the global dairy industry
•From core high-quality dairy ingredients informing the Farmgate Milk Price to
sophisticated, functional components that achieve a return on capital greater
than 15%
•Over 1,000 customers in more than 100 countries, with offices in13 global locations
and a strong partnership network
•Vital for formulas and recipes to some of the world’s most important food and
nutrition brands
•Expanding our advanced, high-value ingredients portfolio to deliver to the rising
demand of high-quality nutrition in health-conscious and functional food markets
B2B dairy expertise that leads the world
Keep momentum in Foodservice
•High performing dairy products covering cream, cheese, butter and cream cheese
•Customers in over 50 countries
•500 cities across Greater China and 6 application centres
•50,000 food operators across Southeast Asia
•Accelerating growth in other markets such as Mexico, Japan, Korea and Taiwan
•Leading positions servicing many major global restaurant chains
•UHT products are one of the Co-op’s most profitable, with a projected 6%
compound annual growth rate over the next seven years
100+
products
50+
products
NZMP and Anchor Food Professionals are world leading product and solutions brands
12

13
A significant and diverse B2B presence globally
Europe
EMPLOYEES (FTE)
150
MANUFACTURING SITES
1
$3
billion
$5
billion
$7
billion
China
EMPLOYEES (FTE)
620
Rest of
Asia Pacific
EMPLOYEES (FTE)
220
New Zealand
EMPLOYEES (FTE)
10,620
MANUFACTURING SITES
24
Rest of AMENA
EMPLOYEES (FTE)
40
Americas
EMPLOYEES (FTE)
100
Markets we export toRevenue
$3
billion
$3
billion
$1
billion
Employees
1
~11,850
Revenue (NZD)
~24b
$2
billion
North Asia
EMPLOYEES (FTE)
100
1. Permanent Full Time Equivalent employees (FTE)

14
Investing to support strategy
Whareroa expansion
FIRST STAGE COMPLETED
•$150m investment into 8 new cool stores.
Increasing storage capacity by 5,000 MT,
enabling storage of up to 26,000 MT of cheese
Early 2026
Edendale expansion
COMPLETED
•$150m investment in new UHT cream plant. Unlocking
up to 20m kgMS additional processing capacity in
Foodservice portfolio and improving optionality
FY26 includes a strong pipeline of investments continuing to unlock capacity for higher margin products
Studholme expansion COMPLETED
•$75m advanced protein hub investment,
increasing capacity and caters to fast-
growing high-protein market for medical
and sports nutrition
MayAugustOctober
Whareroa expansion
FINAL STAGE COMPLETED
20262027
Milkfat processing expansion
BEGINS
•Adding value to milkfat through butter and cream
cheese investments
•Pastry butter sheet capacity expansion to support
Foodservice growth

OUTCOMESTARGETS & POLICY SETTINGS
FY19-24
AVERAGE
Strong
Shareholder
returns
Return on capital¹
10-12%
8.2%
Dividend policy
60-80%
62%
Capital distributions
Guided by Resource Allocation Framework
Stable
balance sheet
Gearing ratio
30-40%
38%
Debt to EBITDA
< 3x
2.7x
Enduring
Co-op
Capital investment
requirements
~$1+ billion per annum
in Essential, Sustainability, Growth
$660m
Emissions reduction
by 2030²
Absolute Scope 1 & 2 Energy & Industrial
GHG emissions
50.4%
Scope 1 and Sope 3 FLAG GHG emissions
intensity from dairy³
30.0%
Delivering on strategic targets
For FY25
•10.9% return on capital above 6-
year average and within long-
term target range
•57c dividend is 80% distribution
of earnings
•Debt to EBITDA amended from
2x-3x to < 3x, reflecting appetite
to maintain a conservative
balance sheet setting
4
•No change in Gearing ratio policy
•20.7% absolute reduction in
Scope 1 & 2 emissions relative to
our base year
•a saving of 46,000tCO2e on
the prior year
•eliminated coal use in the
North Island
1.Average return on capital FY24-30
2.From an FY18 base year
3.Forest, Land and Agriculture emissions from dairy
per tonne of fat-and-protein-corrected milk
4.Amendment applies from FY26
15

1.0
1.0
1.9
1.5
1.7
1.5
1.7
2.2
2021202220232024202520252028
Target
B2B performance drives earnings
16
Operating Profit¹
(NZD billion)
Excluding Mainland
•Excluding Mainland, net of $106m in divestment costs, FY25
operating profit would reduce $252m, highlighting recent step-
change in performance driven by B2B growth
•Targeting 3-years to return to FY25 earnings prior to
proposed divestment through:
•realignment of business, including cost out
•product mix, driven by shifting to higher value Ingredients and
Foodservice growth
Includes
Soprole $0.35b
gain on sale
1.Reported Operating Profit
Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group

4.3
5.3
3.2
2.6
2.6
1.8
2.6
2.7x
3.2x
1.3x
1.2x
1.1x
2021202220232024202520252028
38.5%
42.4%
28.8%
24.0%
23.9%
Financial strength, supporting growth and sustainable returns
17
Adjusted Net Debt (NZD billion)
Debt to EBITDA
•Co-op’s financial strength provides flexibility to:
•manage volatility
•fund growth via disciplined capital allocation
•deliver sustainable returns
•Proposed allocation of Mainland sale proceeds of $4.2b:
•$3.2b tax-free capital return
to shareholders¹
•$0.3b in sale and separation costs
•$0.7b retained to support resilience
and growth
•Modelled Net Debt and leverage metrics assumes retained sales
proceeds are allocated to debt
•$0.1b in sale and separation costs incurred in
2025, pre-transaction
1.Subject to final Board decision once sale is unconditional, proceeds received in New Zealand, and other factors at the time
0.9x
1.1x
Gearing Ratio
22%
28%
Excluding Mainland
Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group
Modelled

Excluding Mainland
6.6%
6.8%
12.4%
11.3%
10.9%
11.6%
12.0%
2021202220232024202520252028
Target
12.5%
13.2%
13.6%
18
Return on Capital
Impact of tax change
A more efficient use of capital
•FY25 return on capital of 10.9%, above the 5-year average and
within long-term target range
•Tax change impact was 1.6 percentage points in FY25
•Targeting upper end of 10-12% strategic target range by FY28
Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group

Excluding Mainland
19
34
35
80
7171
56
55
202120222023202420252025FY26
Forecast
midpoint
Normalised earnings per share
A more focused, returns-driven Co-op
(cents)
•FY25’s 57c dividend is an 80% distribution of 71c earnings
per share
•45c dividend if same percentage applied to earnings
excluding Mainland of 56c
Refer to FY24 & FY25 pro forma Fonterra and Mainland financials section for further detail on the financial impact of divesting Mainland Group

FY26 Outlook & Priorities
FY26 Priorities
•Proposed divestment, shareholder vote and capital return following
completion of sale
•New manufacturing capacity
•Edendale UHT cream and Studholme proteins completed
•New butter and cream cheese investments
•Go-live of the new ERP system at first site in November 2025
* Continuing operations
20
Forecast Farmgate Milk Price
$9.00-$11.00
per kgMS
FY26 forecast earnings¹
45-65
cents per share
1. Earnings forecast is for continuing operations
FY26 Outlook
•Global supply increasing, with stronger milk flows in New Zealand, and
North and South America
•Southeast Asia and Latin America demand remains robust
•Near term demand mixed in China, remains strong for high-fat products
but softer for milk powders
•Longer term, China domestic product mix evolving away from WMP
•Heightened commodity price and exchange rate risk from ongoing
geopolitical dynamics

Key financial drivers of strategy
13 Sept 2024

1,539
1,478
1,480
1,471
1,509
171
167
172
175
184
79.0%
79.1%
79.0%
78.1%
77.8%
Deliver strongest farmer offering
1. New Zealand milk collections
2. Average number of farms supplying milk for the season
Fonterra supplier base and milk collections
¹
Full season figures
20212022202320242025
8,997
8,841
8,637
8,410
8,265
Milk collections market share
Average farms
2
23
•2024/25 season total payout of $10.73 per kgMS on average for a supplying
shareholder holding one share for one milk solid supplied
•Farmgate Milk Price of $10.16 per kgMS
•Fully imputed dividend of 57 cents per share
•The Co-op is committed to providing a competitive offering and industry
leading support
•expanded price risk management services that enable farmers to secure
certainty for a portion of their revenue
•designing new solutions to save time for farmers through better data
connections, reduced task duplication and simplified administrative tasks
•maintaining the opening advance rate of 75% enabled through the strength
of our balance sheet
•Farms collected from and market share (by kgMS) in the 2024/25 season
declined, mainly due to increased competition in the North Island heading into the
start of the season
•Going into the 2025/26 season, Fonterra gained more milk from competitors than
it lost, however still faced a net decline due to land use changes
•Milk collections for 2024/25 season were 1,509m kgMS, up 2.6% on prior season
mainly due to
•favourable early-season weather conditions across most regions supported
strong peak milk flows
•farmers producing more solids per cow reflecting ongoing breeding
improvements and high animal welfare standards
kgMS collected (million)
Average collections per farm (thousand kgMS)

Farmgate Milk Price
$6
$8
$10
$12
JunJulAugSepOctNovDecJanFebMarAprMay
2023/24 season2024/25 season
Monthly Milk Prices
2023/24 season
monthly milk prices
average to $7.83, the
Farmgate Milk Price
7.83
0.04
2.11
0.22(0.04)
10.16
23/24 season
Farmgate
Milk Price
VolumePricesForeign
exchange
Net costs¹24/25 season
Farmgate
Milk Price
Drivers of the Farmgate Milk Price
2024/25 season
monthly milk prices
average to $10.16, the
Farmgate Milk Price
($ per kgMS)($ per kgMS)
24
•Volume impact was due to higher milk collections in the 2024/25 season, increasing 38m kgMS to 1,509m kgMS
•Reference Product prices that informed the 2024/25 season were on average 20.7% higher than the prior season
•The average hedge rate decreased from NZD/USD 0.6120 to NZD/USD 0.5988
•Increase in net costs mainly due to increases in milk collection, energy, staff, packaging and ERP costs
1. Net costs consists of cash costs and capital costs, refer to the Farmgate Milk Price Statement 31 May 2025 for further detail

Excluding Mainland
55.3%
53.8%
54%
56%
54%
23.0%
22.7%
31%
29%
30%
14.2%
15.6%
15%
15%
16%
7.5%
7.9%
20242025202520262027
Consumer
Foodservice
Ingredients Non-Reference
Ingredients Reference
Shifting solids into higher value products
25
•53.8% of milk solids were allocated to the Ingredients Reference Product portfolio,
compared to 55.3% in the prior year, supporting our strategic objective to shift solids into
higher margin products
•The Ingredients Non-Reference portfolio product mix shifted to maximise value based
on the highest returning products. Different products vary in their solids content which
led to a lower percentage allocation of solids to the Ingredients Non-Reference portfolio
•The Co-op remains focused on shifting solids into higher value Non-Reference products
with demand continuing to strengthen for functional proteins in higher value markets,
particularly Europe and the US
•Foodservice solids increased from 14.2% to 15.6% as demand continued to grow for
UHT cream, butter and IQF mozzarella
•Adjusting for the divestment of Mainland and treating Mainland as a customer,
Foodservice allocation shifts down slightly while Ingredients Non-Reference increases
due to:
•~1% of total solids from Greater China Consumer shifting to Foodservice
•~2% of total solids from the Foodservice channel as part of the Mainland Group
divestment shift to Ingredients Non-Reference
•~7% of Consumer solids, excluding Greater China, shift to Ingredients
Non-Reference
Solids allocation
¹
Full financial year figures
Strategic targets
1. Percentages as shown in graph may not align to the calculation based on actual solids due to rounding

581
96
338
168
75
75
98
541
102
340
159
73
75
92
478
120
363
175
74
74
95
487
128
349
159
88
66
98
494
118
362
181
90
63
105
Whole Milk PowderSkim Milk PowderCream
(Butter and AMF)
CheeseCream (other)CaseinOther Proteins
Milk solids allocated to higher value products
Reference ProductsNon-Reference Products
NZ milk solids manufactured (kgMS millions)
For year ended 31 July
% milk solids manufactured
2122232425212223242521222324252122232425212223242521222324252122232425
Whole Milk Powder:
•Similar volume of WMP was manufactured in FY25 despite higher collections, resulting in a
comparative decrease in the percentage of milk solids allocated, aligning to Fonterra’s strategy of
continued growth in higher value products (such as cheese, proteins and cream)
Cream:
•Favourable returns for butter and AMF meant increased allocation of solids to Reference cream
products
•The continued growing demand for Foodservice cream, particularly in the Greater China region,
resulted in more Non-Reference cream solids manufactured
Cheese:
•More solids were allocated to the cheese portfolio with demand up from several key importing
regions
•This also translated into higher allocation of solids to the Foodservice business’ IQF mozzarella
which had strong demand growth in key Asia markets
Proteins:
•The increased allocation of solids into Other Proteins reflects an increase in global demand,
particularly from strategic customers in the US for products such as MPC 85, which is widely
used in ready-to-drink (RTD) protein beverages
Change in kgMS millions
1
TotalReferenceNon-Reference
 38 9 29
26
39.5%
38.1%
33.7%
34.5%
34.1%
6.5%
7.2%
8.5%
9.1%
8.1%
23.0%
24.0%
25.6%
24.8%
25.0%
11.4%
11.2%
12.3%
11.3%
12.5%
5.1%
5.2%
5.2%
6.2%
6.2%
5.1%
5.3%
5.2%
4.7%
4.4%
6.6%
6.5%
6.7%
6.9%
7.2%
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

3,789-
-
- -
-
4,023
79
47
33
79
(4)
FY24MaterialsLabourEnergyFreightOtherFY25
Core Operations manufacturing cash costs per kgMS
Core Operations manufacturing cash costs
($/kgMS)
$2.55
$2.59
$2.79
$2.65
$2.67
$2.11
$2.30
$2.62
$2.58
$2.67
20212022202320242025
Inflation adjustedActual
Core manufacturing costs20212022202320242025
Actual ($ million)
3,2433,3973,883
3,7894,023
Cumulative inflation
1
21.0%12.7%6.4%3.1%
Inflation adjusted ($ million)
3,9243,8294,1303,9074,023
Collections (kgMS million)
New Zealand
1,5391,4781,480
1,4711,509
1.Real costs have been calculated using CPI and inflation in manufacturing components
2.Excludes ocean freight
27
Movements in Core Operations
manufacturing cash costs
($ million)
$ / kgMS
•Core Operations manufacturing costs per kgMS is the efficiency component of
the Gross Profit from Core Operations metric
•In FY25, manufacturing costs increased, primarily due to higher material
and labour costs driven by inflation changes in product mix, and increase in
milk collections
•These increases were partially offset by ongoing efficiency gains, cost
management initiatives, and optimisation of energy, ingredient, and
packaging usage
•Note: Movements in cost per kgMS may not directly align with changes in
total costs, as per-unit costs are impacted by milk volumes and product mix
2
2.580.04 0.01 0.01 0.02 0.03 2.67

Shifting to complex value chain
impacting operations in near term
Product made right first timeCost of quality
Milk utilisation
96.4%
96.5%
96.3%
96.7%
96.6%
20212022202320242025
95.0%
94.5%
95.3%
95.8%
95.7%
20212022202320242025
$58m
$72m
$56m
$92m
$99m
0.33%
0.37%
0.26%
0.45%
0.41%
20212022202320242025
Unplanned downtime
6.5%
6.4%
5.8%
5.0%5.0%
20212022202320242025
28
Milk Utilisation remains consistently high reflecting:
•Continued focus on solids recovery and product mix optimisation
•Improvements in yield and processing efficiencies
Unplanned downtimecontinues to trend favourably, reflecting:
•Preventative maintenance and reliability uplift across the network
•Operational efficiencies delivered through theRun to Target
programme to standardise activity and improve performance
•Ongoing investment in asset stability and reliability
Right first-timeperformance remains strong reflecting:
•Continued focus on process control and grading consistency across
manufacturing sites
•Seasonal and product mix challenges that impacted grading
outcomes and applying learnings to strengthen quality assurance
•Ongoing refinement of operational practices to support consistent
product quality and customer satisfaction
Cost of qualityincreased compared to the prior year, driven by elevated
milk prices, higher production volumes, and greater operational complexity.
The result reflects a slight deterioration in performance which necessitates
targeted improvement:
•Continued investment in quality systems and asset reliability to
support consistent product outcomes
($ million)
% of NZ Milk Revenue

Cash operating expense per kgMS
$1.33
$1.32
$1.38
$1.39
$1.40
$1.10
$1.17
$1.30
$1.36
$1.40
20212022202320242025
Inflation adjustedActual
Channel
Allocation of
collections
(m kgMS)
Actual cash
operating
expenses
Cash operating
expenses
Ingredients
1,187kgMS
9 kgMS 
$1,052m
$81m 
$0.89/kgMS
$0.06 /kgMS 
Foodservice
322kgMS
29 kgMS 
$605m
$21m 
$1.88/kgMS
$0.12 /kgMS 
Discontinued
operations¹
,
²
108kgMS
1 kgMS 
$608m
$21m 
$5.63/kgMS
$0.14 /kgMS 
Cash operating expenses ($ million)20212022202320242025
Operational expenses
1,8101,8582,068
2,103 2,142
ERP investment
---39123
Total
1,8101,8582,068
2,1422,265
Compound CPI
20.7%12.5%6.1%
2.7%
Inflation adjusted
2,1842,0902,1942,2002,265
Collections (kgMS million)
New Zealand
1,5391,4781,480
1,4711,509
Australia
106106106107108
Total
1,6451,5841,5861,5781,617
•Cash operating expenses per kgMS were impacted by:
•6 cents increase in ERP investment from prior year
•3 cents increase from inflationary impacts
•partially offset by:
•3 cents benefit from higher collections this year
•2 cents benefit mainly due to reduced professional fees associated with one
off projects in the prior year
•Ingredients cash opex per kgMS increased 6 cents driven by the ERP investment
•Foodservice cash opex per kgMS improved 12 cents driven by the higher milk
solids allocation partially offset by the ERP investment
Note: Comparative information has been represented for consistency with the current period
1.2024 comparative figures exclude operating expenses related to DPA Brazil
2.Discontinued operations allocation of solids has been adjusted to only include Australia collections
Cash operating expenses
($/kgMS)
29

Capital investments to support resilience and growth
285
281
333
291
317
36
54
51
54
71
26
78
85
40
104
45
45
60
59
55
74
76
92
114
88
466
534
621
558
635
20212022202320242025
Other operationsMainlandDecarbonisation
WastewaterNZ operations
466
534
621
558
635
79
53
47
56
167
63
30
79
106
128
608
617
747
720
930
1,000
980
2021202220232024202520262027
Other capital investedGrowth capital expenditure
Essential capital expenditure
Strategic targets
Capital invested
Full financial year figures ($ million)
Breakdown of essential capital expenditure
¹
Full financial year figures ($ million)
•FY25 total capital invested was $930m, consisting of Essential $635m, Growth $167 and Other $128m
•Essential capital expenditure comprised $104m invested on decarbonisation and energy security projects as a part of our roadmap to meet sustainability commitments, $71m on
wastewater assets to improve our environmental footprint and enables our license to operate, and $317m on maintaining and improving our asset network in New Zealand and
globally, $55m on Mainland Group and $88m other essential capital expenditure
•The increase in growth capital expenditure to $167m supportsthe growth of our Foodservice and Ingredients businesses, including capacity expansion for high value products such
as advanced proteins and UHT cream
•Other capital invested includes Right of Use asset additions, other equity investments and $20m in the Ki Tua Investment Fund
30
1.Comparative information has been represented for consistency with the current period

Additional performance information
13 Sept 2024

•Dairy market conditions remain broadly favourable:
•Demand remains strong across key import regions,
particularly Southeast Asia and Middle East, with
Africa demand returning
•Southeast Asia WMP demand remains robust
despite prices being above historical averages
•Near term demand in China is mixed, with softened
powders demand offset by strong cheese and
butter demand. The outlook is evolving as local milk
supply shifts product mix to value-add products
•US milk production is accelerating, supported by
herd expansion, strong margins and increased
cheese processing capacity
•EU milk production is recovering, with growth
constrained by heatwave conditions and animal
health risks, despite strong milk prices
•New Zealand production is favourable, with record
early-season volumes and strong price signals
Latin America
3-month5.4% 
12-month5.3% 
Middle East & Africa
3-month
3.4% 
12-month3.6% 
Asia(ex China)
3-month6.6% 
12-month4.4% 
China
3-month2.4% 
12-month3.2% 
Improving supply, and
strong demand from
key importing regions
ProductionImports
Note: Imports are total global imports, and production is total for each country
Refer to appendix for source data and date ranges
US
3-month3.2% 
12-month0.9% 
NZ
3-month7.3% 
12-month2.6% 
EU
3-month0.0% –
12-month0.4% 
Australia
3-month4.4% 
12-month1.1% 
32

Total Group performance
For year ended 31 July
Total Group
Continuing operationsDiscontinued operations
NZD million20242025∆%
1
20242025∆%
1
20242025∆%
1
Sales volume ('000 MT)3,529
3,488 (1)%
3,0343,074
1%495
414
(16)%
Sales volume (million kgMS)1,6131,620
- %
1,5001,516
1%
113104
(8)%
Revenue
22,994 26,450 15%20,423 24,111 18%2,571 2,339 (9)%
Cost of goods sold
(19,106)(22,259)(17)%(17,428)(20,826)(19)%(1,678)(1,433)15%
Gross profit
3,888 4,191 8%2,995 3,285 10%893 906 1%
Gross margin (%)
16.9%15.8%14.7%13.6%34.7%38.7%
Operating expenses
(2,468)(2,594)(5)%(1,746)(1,838)(5)%(722)(756)(5)%
Other
2
107 135 26%93 113 22%14 2257%
Operating profit
1,527 1,732 13%1,342 1,560 16%185172(7)%
Net finance costs
(164)(186)(13)%(156)(184)(18)%(8)(2)75%
Tax expense
(235)(467)(99)%(139)(372)(168)%(96)(95) 1%
Profit after tax
3
1,128 1,079 (4)%1,047 1,004 (4)%81 75(7)%
Earnings per share (cents)
67 65 (3)%63 60 (5)%
4
5
25%
Pre-tax normalisations
4
66 106 -(91)(119)-157225-
Normalised operating profit
1,5931,83815%1,2511,44115%34239716%
Normalised profit after tax
3
1,194 1,185 (1)%975910(7)%21927526%
Normalised EPS (cents)
71 71 - %58 54 (7)%
13
17
31%
Note: Comparative information has been re-presented for consistency with the current period
1.Percentages as shown in table may not align to the calculation based on numbers in the table due to rounding
2.Comprises of other operating income, net foreign exchange gains and share of profit or loss of equity
accounted investees
3.Includes amounts attributable to non-controlling interests
4.Total Group Normalisations of $(106)m in relation to the divestment of Mainland Group (2024: $(66)m in relation to
the sale of DPA Brazil). Inter-Group normalisations of $119m (2024: $91m) between Continuing and Discontinued
operations reflecting trade terms for sales and purchases between the Group and Mainland Group that will change
following the divestment. The pricing elements relating to trade terms that are not expected to continue following
the divestment have been normalised, and excluded from segment results, refer to Note 1a in the 2025 Annual
Financial Statements
33

Normalised continuing operations channel performance
Note: Comparative information has been re-presented for consistency with the current period
1.Percentages as shown in table may not align to the calculation based on numbers in the table due to rounding
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 for Total, Ingredients and Foodservice of $648m, $432m and $216m ($357m, $252m
and $105m for the comparative period), respectively
4.Pricing elements relating to trade terms that are not expected to continue following the proposed divestment of
Mainland Group are normalised and excluded from operating profit. For 2025 this is $119m ($91m for the prior
comparable period). Refer to note 1a in the 2025 Annual Financial Statements
For year ended 31 July
Total continuing operationsIngredientsFoodservice
NZD million20242025∆%
1
2024202520242025
Sales volume ('000 MT)
3,0343,0741%2,1992,197835877
Sales volume (million kgMS)
1,5001,5161%1,201 1,193299 323
Revenue
20,30323,93718%14,79317,5415,5106,396
Cost of goods sold
(17,399)(20,771)(19)%(12,843)(15,344)(4,556)(5,427)
Gross profit
2,9043,1669%1,9502,197954969
Operating expenses
(1,746)(1,838)(5)%(1,074)(1,170)(672)(668)
Other
2
9311322%627431 39
Normalised operating profit
3,4
1,2511,44115%9381,101313 340
Gross margin
14.3%13.2%13.2%12.5%17.3%15.2%
Operating profit margin
6.2%6.0%6.3%6.3%5.7%5.3%
34

Normalised discontinued operations channel performance
For year ended 31 July
Total discontinued operations
NZD million20242025∆%
2
Sales volume ('000 MT)
495414(16)%
Sales volume (million kgMS)
113104(8)%
Revenue
2,5712,339(9)%
Cost of goods sold
(1,678)(1,433)15%
Gross profit
8939061%
Operating expenses
(722)(756)(5)%
Other
3
142257%
Operating profit
4
185172(7)%
Normalisations
5
157225-
Normalised operating profit
34239716%
Gross margin
34.7%38.7%
Operating profit margin
7.2%7.4%
Note: Comparative information has been re-presented for consistency with the current period
1.Includes intra-group eliminations and adjustments between continuing and discontinued operations
2.Percentages as shown in table may not align to the calculation based on numbers in the table due to rounding
3.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss of equity
accounted investees
4.Includes corporate costs for 2025 of $75m and 2024 of $75m
5.Normalisations of $(106)m in relation to the divestment of Mainland Group (2024: $(66)m in relation to the sale
of DPA Brazil). Inter-Group normalisations of $119m (2024: $91m) reflecting trade terms for sales and
purchases between the Group and Mainland Group
35
•Normalised discontinued operations operating profit of $397m is up
$55m due to:
•Consumer having higher volumes and better pricing
•Australian business having a stable milk price against higher
global commodity prices

New Zealand-sourced Ingredients’ product mix
Fonterra Revenue Reference and Non-Reference Price Relativities
(USD/MT)
Note: Refer to additional information for source data and date ranges
FY23FY24FY25
Non-Reference Product shipment price
Reference Product shipment price
2,500
3,500
4,500
5,500
6,500
Annual average Reference and
Non-Reference price
•Revenue price relativities narrowed significantly during the year. Compared to last year, the average price for the Reference portfolio
increased USD 790 per MT or 24%, compared with the Non-Reference portfolio, which increased USD 267 per MT or 6%
•The Reference portfolio price increase was mainly due to materially higher WMP, Butter and AMF prices. In addition, Butter and AMF,
that are higher revenue price per MT products, had an increased weighting in the portfolio due to strong sales volume growth
•The Non-Reference portfolio price increased due to strong demand for cheese and proteins, particularly MPC and mozzarella
•Impact of lower price relativities on earnings was reduced due to favourable margin hedging and contract timing
36

New Zealand-sourced Ingredients’ product mix
20242025∆%
Sales Volume (‘000 MT)
Reference Products
1,7441,698(3)%
Non-Reference Products
8919416%
Revenue (NZD)
Reference Products ($ billion)
10.1 12.3 23%
Non-Reference products ($ billion)
6.4 7.3 15%
Reference Products ($ per MT)
5,764 7,264 26%
Non-Reference products ($ per MT)
7,145 7,754 9%
Cost of Milk (NZD)
Reference Products ($ billion)
(7.5)(9.9)(31)%
Non-Reference Products ($ billion)
(3.3)(4.1)(24)%
Reference Products ($ per MT)
(4,313)(5,810)(35)%
Non-Reference Products ($ per MT)
(3,693)(4,344)(18)%
•Favourable product mix shift between Reference and Non-Reference
portfolio, with 50,000 MT more into higher value Non-Reference
products and 46,000 MT less Reference products
•Total revenue per MT has increased 19%. Reference portfolio revenue
per MT increased 26%, materially more than the Non-Reference
portfolio which increased 9%
•Strength of the Reference portfolio increase was due to higher weighting
of butter and AMF coupled with stronger prices, and reduced volumes of
WMP offset by higher WMP prices
•Total milk cost per MT has increased 29%. The Reference portfolio cost
of milk per MT increased significantly more than the Non-Reference
portfolio, 35% compared to 18%. This is due to the strong rise in the
value of fat and the Reference portfolio having a higher fat component
Note: Percentages as shown in the table may not align with 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 and Consumer
channels and excludes bulk liquid milk. Bulk liquid milk for 2025 was 74,000 MT of kgMS equivalent (for the comparative period it was 71,000 MT of kgMS equivalent). Milk solids used in the Reference Products sold were 958 million kgMS
and 467 million kgMS in the Non-Reference Products (for the comparative period 962 million kgMS in Reference Products and 458 million kgMS in Non-Reference Products)
37

938
93(27)
97
0
1,101
FY24
operating
profit
Core
Operations
VolumeMarginOperating
expenses and
other
FY25
operating
profit
276
210
291
161
217
458
361
65
16.8%
11.6%
14.1%
11.2%
15.1%
14.3%
13.1%
8.3%
-70.0%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10. 0%
20. 0%
-120
80
280
480
680
880
Q1Q2Q3Q4Q1Q2Q3Q4
Operating profit ($ million)Gross margin (%)
Ingredients performance
Quarterly performance
•Ingredients operating profit is up $163m, due to favourable in-market margins driven
by strong protein prices and favourable Core Operations reflecting:
•favourable margins due to timing of contracting and hedging of the Non-
Reference portfolio, more than offsetting narrowing price relativities
•higher allowance from Milk Price due to higher lactose input costs and
working capital
•offset by higher ERP costs, with $106m of the $123m allocated to Ingredients
Core Operations, with spend expected to peak over this year and the next
38
•FY24 reported operating profit re-presented from $898m to $938m, reflecting a
favourable $40m shift in allocating the Australia business to discontinued operations as
part of the Mainland Group divestment
•FY25 Q2 and Q3 experienced higher sales volumes and stronger pricing in the butter,
cheese and milk protein concentrate portfolios compared to last year
•Q4 impacted by lower sales and milk volumes, continued narrowing of price relativities
•Early season contracting for FY26 is more in line with average FY25 price
relativity levels
Key performance drivers
Operating profit ($ million)
Within the regions
Note: Comparative information has been re-presented for consistency with the current period. Prepared on a continuing operations basis
FY25 FY24

Within the regions
313
95
113(209)
28340
FY24
operating
profit
Core
Operations
VolumeMarginOperating
expenses and
other
FY25
operating
profit
203
115
90
(95)
108
151
90
(9)
22.9%
18.1%
18.1%
9.2%
13.5%
17.9%
15.0%
13.7%
-70.0%
-50.0%
-30.0%
-10.0%
10. 0%
30. 0%
-120
80
280
480
680
880
Q1Q2Q3Q4Q1Q2Q3Q4
Operating profit ($ million)Gross margin (%)
Foodservice performance
Key performance drivers
Operating profit ($ million)
Quarterly performance
39
•Foodservice operating profit is up $27m, due to:
•higher attribution from Core Operations reflecting strong Cream returns
•sales volume growth mainly due to increased demand from Greater China for
UHT cream, butter and IQF mozzarella
•in-market margins down year-on-year, with 7% price lift offset by increase in
cost of milk, particularly within Greater China UHT cream portfolio
•operating expenses favourable reflecting business growth and share of ERP
costs in Core Operations
•FY24 reported operating profit re-presented from $463m to $313m, reflecting $67m
allocated to discontinued operations and an adverse $83m allocation reflecting
inclusion of Greater China consumer business and overheads retained from
Mainland Group separation
•FY24 Q4 was impacted by Greater China Consumer’s reduced margins, higher
operating expenses and $26m relating to a brand impairment
•FY25 H2 earnings impacted by seasonal nature of Greater China operating
expenses and $80m relating to the realignment of the remaining Consumer business
and discontinuation of a product line
FY25
Note: Comparative information has been re-presented for consistency with the current period. Prepared on a continuing operations basis
FY24

Operating expenses
NZD million20242025%∆
1
Staff expenses²
776826
6%
Storage and distribution
130127
(2)%
Advertising and promotion
10998
(10)%
Information technology
185177
(4)%
IT & Digital transformation
39123
215%
Technical and professional
207185
(11)%
Depreciation & amortisation
155166
7%
Other
145136
(6)%
Continuing operations operating expenses
1,7461,838
5%
Discontinued operations operating
expenses
722756
5%
Total Group operating expenses
2,4682,594
5%
Note: Comparative information has been re-presented for consistency with the current period. For operating expenses by function, refer to note 3a of the 2025 Annual Financial Statements
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.Staff expenses displayed do not align to reported staff expenses in Financial Statements due to additional breakdown of IT & Digital transformation displayed in the table
•Operating expenses from continuing operations increased $92m, or
5%, mainly due to increased investment in strategic initiatives to
enable future efficiencies
•Investment in IT and Digital transformation to upgrade ERP systems
increased $84m, to $123m, with spend expected to peak over this
year and the next in Core Operations
•Total spend on the ERP upgrade is expected to be $450-500m over a
6-year period and will support resilience of the enterprise systems
•Staff expenses increased $50m as the business refocuses its
structure to support strategic initiatives
•Adjusting for $106m in costs associated with the divestment of
Mainland Group and $99m of DPA Brazil expenses last year,
operating expenses from discontinued operations are unfavourable
$27m, or 4%
Research and development costs20242025%∆
1
Total Group research and
development costs ($m)
991034%
40

Free cash flow is lower than last year, reflecting higher working capital through the higher milk price, increased inventory levels and the accelerated advance rate
•Advance rate payments rose to 89% in FY25 (up from 87% in FY24) and reflected the higher milk price and increased milk solids collected
•Cashflows from movements in inventory were $0.7 billion higher driven by the increased cost of milk and higher New Zealand Ingredients inventory volumes
Returning cash to farmers faster reflected in free cash flow
1,602
135
572(1,060)
131,262
FY24
free cash flow
EarningsSuppliers
payable
Trade and
other working
capital
Capex and
other
FY25
free cash flow
1,417
(324)
3,650
1,602
1,262
FY21FY22FY23FY24FY25
Movements in free cash flow¹
($ million)
Five-year trend
($ million)
41
1.Movement in free cash flow includes cash flows relating to entities classified as held for sale

•Net debt and leverage metrics are
consistent with prior year reflecting
cash earnings that supported
•dividend payments
•higher working capital,
including owing to suppliers
•ongoing capital expenditure
•The strong balance sheet provided
flexibility to accommodate the
accelerated advance rate to
farmers in the final two months of
the financial year
Strong balance sheet reflected in key metrics
and ‘A band’ credit rating
6.1
5.6
5.8
4.2
5.5
4.3
5.3
3.2
2.62.6
20212022202320242025
Half YearFull Year
45.7
44.8
39.4
32.7
32.8
38.5
42.4
28.8
24.0
23.9
2.7
3.2
1.3
1.2
1.1
20212022202320242025
Gearing ratio (%) – AverageGearing ratio (%) – Year-end
Year-end Debt to EBITDA (x)
Leverage
Working capital days
92
98
91
89
89
20212022202320242025
Credit rating
S&P Global Ratings A-Stable outlook
Fitch RatingsAStable outlook
Net debt ($ billion)
42

•Return on capital of 10.9%, above the 5-year average and
the FY25 target range of 8 – 10%
•The change relative to previous period reflects:
•$245m higher normalised operating profit, partially
offset by
•a change in notional tax rate from 16.1% to 27.0%,
which increased the tax charge $201m with an
adverse 1.6 percentage point impact
•Average capital employed increased $0.4b to $12.3b, due
to higher inventory volume and price per metric tonne
Return on capital
For the year ended 31 July
NZD million
20242025
Total Group normalised operating profit
1,593 1,838
Finance income on long-term advances
14 8
Notional tax charge
(259)(498)
Total Group net normalised operating profit after tax
1,3481,348
Capital employed at 31 July
10,912 10,980
Impact of seasonal capital employed
992 1,368
Average capital employed
11,904 12,348
Return on capital
11.3%10.9%
43

Global Markets end-to-end performance
For year ended 31 July
Total Global Markets
1
IngredientsFoodservice
NZD million20242025∆%
2
2024202520242025
Sales volume ('000 MT)
2,0902,042(2)%1,6201,568470474
Sales volume (million kgMS)
1,0511,027(2)%903872147155
Revenue
14,14616,28715%11,33413,1742,8123,113
Cost of goods sold
(12,377)(14,290)(15)%(9,867)(11,475)(2,510)(2,815)
Gross profit
1,7691,99713%1,4671,699302298
Operating expenses
(1,118)(1,158)(4)%(831)(890)(287)(268)
Other
3
759527%51612434
Operating profit
4
72693429%6878703964
Gross margin
12.5%12.3%12.9%12.9%10.7%9.6%
Operating profit margin
5.1%5.7%6.1%6.6%1.4%2.1%
1.Global Markets performance is prepared on a continuing operations basis on the parameters of the Mainland
divestment as at 31 July and includes sales to other segments. Comparative information has been re-presented
for consistency with the current period.
2.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table
due to rounding of figures
3.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss of equity
accounted investees
4.Includes corporate costs for Total, Ingredients and Foodservice of $422m, $305m and $117m ($236m, $174m
and $62m for the comparative period), respectively
44
•FY24 reported operating profit re-
presented from $1,035m to
$726m, reflecting $309m allocated
to discontinued operations as part
of the Mainland Group divestment,
including:
•Ingredients, $40m loss
relating to the Australian
business ($33m profit in
FY25)
•Foodservice, $67m mainly
relating to the Australian
business and FBNZ ($33m
in FY25)
•Consumer, $282m mainly
related to FBNZ, Australia,
Middle East, Sri Lanka and
Southeast Asia brands
($217m in FY25)
•The Middle East Foodservice and
Consumer business, which is part
of the Mainland Group divestment,
has a proportion of earnings in
Global Markets continuing
operations as at 31 July 2025 of
$38m ($22m for FY24)

Greater China end-to-end performance
For year ended 31 July
Total Greater China
1
IngredientsFoodservice
NZD million20242025∆%
2
2024202520242025
Sales volume ('000 MT)
9441,0329%579629365403
Sales volume (million kgMS)
4494899%298321151168
Revenue
6,1577,65024%3,4594,3672,6983,283
Cost of goods sold
(5,022)(6,481)(29)%(2,976)(3,869)(2,046)(2,612)
Gross profit
1,1351,1693%483498652671
Operating expenses
(628)(680)(8)%(243)(280)(385)(400)
Other
3
1818-111375
Operating profit
4
525507(3)%251231274276
Gross margin
18.4%15.3%14.0%11.4%24.2%20.4%
Operating profit margin
8.5%6.6%7.3%5.3%10.2%8.4%
1.Greater China performance is prepared on a continuing operations basis and includes sales to other segments
2.Percentages as shown in table may not align to the calculation of percentages based on numbers in the table
due to rounding of figures
3.Consists of other operating income, net foreign exchange gains/(losses) and share of profit or loss of equity
accounted investees
4.Includes corporate costs for Total, Ingredients and Foodservice of $226m, $127m and $99m ($121m, $78m
and $43m for the comparative period), respectively
45
•Greater China Consumer is not
included in the proposed Mainland
Group divestment, and the
business has shifted into the
Foodservice channel
•Foodservice operating profit has
been adversely impacted $47m
and $30m in 2024 and 2025,
respectively from the inclusion of
the Consumer business

FY24 & FY25 historical pro forma
Fonterra and Mainland financials
13 Sept 2024

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 audited financial statements for the years ended 31 July 2025 and 31 July 2024.
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. A supplementary table has been provided to illustrate the likely impact of the proceeds from the transaction on the historical pro forma ratios as at 31 July 2025.
2.Raw Milk Supply Agreement, Global Supply Agreement and Distribution Agreement (See next slide, Agreements, for further detail)
•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
3.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
4.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
5.Divestment costs
•A normalisation adjustment of $106 million of divestment transaction costs has been made to the 31 July 2025 Fonterra reported results and the Mainland Group historical pro
forma results
6.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
7.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)
47

Raw Milk Supply AgreementGlobal Supply AgreementDistribution AgreementOther Agreements
Governs raw milk supply from Fonterra to Mainland
Group in New Zealand and Fonterra’s right to
purchase any excess cream and raw milk back
from the Mainland Group.
•The initial term is ten years. It automatically
renews until it is terminated. Either party can
terminate on 36 months' written notice after the
first seven years of the term.
•Agreement is non-exclusive. Fonterra may
supply raw milk to other parties, and Mainland
Group may source raw milk from other
providers.
•Contains an agreed pricing framework that
applies for the life of the contract, unless
renegotiated.The base price payable the
Farmgate Milk Price, plus a premium. A
collection and delivery charge is also payable. A
further premium is payable for winter milk.
•Mainland Group will likely purchase a similar
volume of raw milk as is currently supplied or
made available to the Mainland business.
However, the Mainland Group can only
purchase up to 350 million litres of raw milk per
12-month season (plus an additional 200 million
litres per 12-month season, at a higher
premium).
Governs the manufacturing and supply of
both ingredients and finished products by
Fonterra for Mainland Group (and vice
versa).
•The initial term is three years, after
which the Agreement automatically
renews until it is terminated. Either
party can terminate on 36 months'
written notice after the first three years
of the term, unless otherwise specified
on a product-by-product basis.
•Agreement is non-exclusive, and
either party may source ingredients or
finished products from other providers.
•It is expected that Mainland Group will
likely purchase a similar volume of
ingredients or finished products as is
currently supplied or made available
to the Mainland business by Fonterra.
•The Agreement contains an agreed
pricing methodology for each product
type, which will remain fixed for the
first three years of the term.
Thereafter, the pricing methodology
may be reviewed and reset every
three years.
The Distribution Agreement provides for
Mainland Group and Fonterra to have
continued access to the territories in
which it currently sells its products, but
where it does not otherwise have its own
sales function or distribution network.
•The initial term is three years, after
which the Agreement automatically
renews unless it is terminated by
either party on 36 months' written
notice after the first three years of the
term. The Agreement will
automatically terminate if the Global
Supply Agreement is terminated.
•The Agreement is non-exclusive,
except as otherwise agreed in any
particular territory on a case-by-case
basis.
•The products to be distributed under
the Distribution Agreement in a
particular territory, are to be
purchased and supplied under the
terms of the Global Supply
Agreement.
Fonterra and Lactalis have agreed to
finalise some of the details in the
following agreements prior to completion
of the sale:
•A Separation Agreement, which
governs the practical steps to achieve
overall separation of the Mainland
Group from the Fonterra Group.
•A Transitional Services Agreement,
which sets out the terms on which
certain IT and "back-office" services
are provided by the Fonterra Group to
Mainland Group (and vice versa) for a
defined period following Completion
•Intellectual Property licenses to
provide for each party to transition
away from the use of the other party's
brands and trademarks within 36
months after completion, for the
licence of certain other technical and
brand related intellectual property, and
for the co-existence of the use of the
“Anchor” and “Anchor Food
Professionals” brands going forward.
Agreements
48

For year ended 31 July 2024
For year ended 31 July 2025
NZD million
Fonterra
reported
Fonterra
historical Pro
Forma
Pro Forma
Group
Eliminations
Mainland
Group
historical Pro
Forma
Fonterra
reported
Fonterra
historical Pro
Forma
Pro Forma
Group
Eliminations
Mainland
Group
historical Pro
Forma
Revenuefrom sale of goods
22,822 20,154(2,394)5,06226,450 23,758(2,909)5,601
Cost of goods sold (excluding
depreciation and amortisation)
(18,560)(16,854)2,394(4,100)(21,818)(20,203)2,909(4,524)
Gross profit
4,262 3,300
-9624,632 3,555-1,077
Operating expenses (excluding
depreciation and amortisation)
(2,182)(1,585)-(597)(2,392)(1,656)-(736)
Other
107 93-14127 113-14
EBITDA
2,187 1,808
-3792,367 2,012-355
Depreciation and amortisation¹
(627)(521)-(106)(635)(532)-(103)
Operating profit (EBIT)
1,5601,287
-2731,732 1,480-252
Net finance costs
(157)(156)-(1)(186)(184)-(2)
Profit before tax
1,403 1,131
-2721,546 1,296-250
Tax expense²
(235)(135)-(100)(467)(360)-(107)
Profit after tax
1,168 996-1721,079 936-143
Normalisation adjustments
3
----106--106
Normalised operating profit (EBIT)
1,560 1,287
-2731,838 1,480-358
Normalised profit after tax
1,168 996
-1721,185 936-249
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
2.Tax treatment change effective from FY25, Fonterra has exhausted its NZ tax losses and NZ tax expenses will
generate imputation credits from FY25 onwards. As part of the change, dividends on supply backed shares are no
longer treated as a business expense by Fonterra
3.The Mainland Group historical pro forma statement of profit or loss for the year ended 31 July 2025 includes $106
million of Mainland Group divestment related costs
Compiled by combining the extracted results of:
•continuing operations from Fonterra Group’s Statement of Profit or Loss and Other Comprehensive Income (Continuing operations); and
•discontinued operations from note 2(b) of the Fonterra Group financial statements (Discontinued operations).
For the year ended 31 July 2024, the Fonterra reported historical financial information excludes a $40 million post-tax loss on sale (equivalent to a $33 million pre-tax operating loss) relating to
DPA Brazil. As a result, these amounts will not reconcile directly to discontinued operations
49

For year ended 31 July 2024
For year ended 31 July 2025
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
20,423(269)20,154
24,111
(353)23,758
Cost of goods sold (excluding depreciation and amortisation)
(17,062)208(16,854
(20,460)
257(20,203)
Gross profit
3,361(61)3,300
3,651
(96)3,555
Operating expenses (excluding depreciation and amortisation)(1,591)6(1,585)(1,672)16(1,656)
Other93-93
113
-113
EBITDA
1,863(55)1,808
2,092
(80)2,012
Depreciation and amortisation¹(521)-(521)532-(532)
Operating profit (EBIT)1,342(55)1,2871,560(80)1,480
Net finance costs(156)-(156)(184)-(184)
Profit before tax1,186(55)1,1311,376(80)1,296
Tax expense²(139)4(135)(372)12(360)
Profit after tax1,047(51)9961,004(68)936
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
2.Tax treatment change effective from FY25, Fonterra has exhausted its NZ tax losses and NZ tax expenses will
generate imputation credits from FY25 onwards. As part of the change, dividends on supply backed shares are no
longer treated as a business expense by Fonterra
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;
•recognise the impact of the Raw Milk Supply, Global Supply, and Distribution Agreements; and
•reflect changes to the transaction perimeter not presented in Discontinued operations.
50

For year ended 31 July 2024
For year ended 31 July 2025
NZD million
Fonterra
reported
discontinued
operations
Pro Forma
Adjustments
Mainland Group
historical Pro
Forma
(Pre-eliminations)
Fonterra
reported
discontinued
operations
Pro Forma
Adjustments
Mainland Group
historical Pro
Forma
(Pre-eliminations)
Revenuefrom sale of goods
2,3992,6635,062
2,339
3,2625,601
Cost of goods sold (excluding depreciation and amortisation)
(1,498)(2,602)(4,100)
(1,358)
(3,166)(4,524)
Gross profit
90161962
981
961,077
Operating expenses (excluding depreciation and amortisation)(591)(6)(597)(720)(16)(736)
Other14-14
14
-14
EBITDA
32455379
275
80355
Depreciation and amortisation¹(106)-(106)(103)-(103)
Operating profit (EBIT)2185527317280252
Net finance costs(1)-(1)(2)-(2)
Profit before tax2175527217080250
Tax expense(96)(4)(100)(95)(12)(107)
Profit after tax121511727568143
Mainland 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
Compiled by extracting the results of Discontinued operations. Pro forma adjustments and pro forma eliminations were made to:
•remove $8m post-tax profit in relation to Soprole (FY24: $40m post-tax loss in relation to DPA Brazil (equivalent to a $33m pre-tax operating loss));
•reverse historical intercompany eliminations;
•remove the effects of Fonterra’s existing transfer pricing arrangements related to Mainland Group which will cease post divestment;
•recognise the impact of the supply agreements between Fonterra and Mainland Group; and
•reflect changes to the Transaction perimeter not presented in Discontinued operations.
Following these pro forma adjustments, the Mainland Group historical pro forma (pre eliminations) Statements of Profit or Loss were derived.
Discontinued operations results include $106 million of divestment transaction costs that have not been normalised in the Mainland Group historical pro forma Statements of Profit or Loss.
Normalising these costs would increase Mainland Group’s operating profit (EBIT) for the year ended 31 July 2025 by $106 million.
51

Historical pro forma Statement of Financial Position
As at 31 July 2025
NZD million
Fonterra
reported
Fonterra
historical Pro
Forma
Pro Forma
adjustments
Mainland Group
historical Pro
Forma
Total assets
17,52713,710(197)4,014
Total liabilities
(9,189)(8,145)197(1,241)
Net assets
8,3385,565-2,773
Fonterra
As at 31 July 2025
NZD million
Fonterra Reported Total
Group less Held for Sale
Pro Forma
adjustments
Fonterra historical
Pro Forma
Total assets
13,712(2)13,710
Total liabilities
(8,220)75(8,145)
Net assets
5,492735,565
Mainland Group
As at 31 July 2025
NZD million
Fonterra Reported Total
Held for Sale
Pro Forma
adjustments
Mainland Group
historical Pro
Forma
Total assets
3,8151994,014
Total liabilities
(969)(272)(1,241)
Net assets
2,846(73)2,773
Compiled by extracting assets and liabilities classified as held for sale in the Fonterra
Group historical financial statements as at 31 July 2025 (Held for Sale).
Pro forma adjustments were made to:
•exclude $27m and $5m of unrelated assets and liabilities;
•add back Mainland Group’s trade balances with Fonterra at 31 July 2025 (extracted
from Fonterra’s accounting records), which following the transaction will become
external trade balances; and
•reflect changes to the transaction perimeter not classified as Held for Sale.
The Fonterra historical pro forma Statement of Financial Position has been compiled by
extracting total assets and liabilities from the Fonterra Group consolidated financial
statements as at 31 July 2025 and deducting assets and liabilities classified as held for
sale (excluding $27 million and $5 million of unrelated assets and liabilities).
Pro forma adjustments were made to:
•add back Mainland Group’s trade balances with Fonterra at 31 July 2025 (extracted
from Fonterra’s accounting records), which following the transaction will become
external trade balances; and
•reflect changes to the transaction perimeter not classified as Held for Sale in
Fonterra Group’s Statement of Financial Position.
The Fonterra reported historical Statement of Financial Position has been compiled by
extracting total assets and liabilities from the Fonterra Group consolidated financial
statements as at 31 July 2025.
52

Summary of historical pro forma financial ratios
Summary historical pro forma financial ratios
For year ended 31 July 2025
Fonterra reported
Fonterra historical
Pro Forma
Mainland Group historical Pro
Forma
Adjusted net debt (NZD $m)
2,6202,6146
Gearing ratio
23.9%32.0%
Debt to EBITDA ratio
1.1x1.3x
Average capital employed (NZD $m, 13 month rolling average)
12,3489,3473,001
Return on capital
10.9%11.6%8.8%
53
Supplementary adjusted financial ratios
For year ended 31 July 2025
Fonterra adjusted historical pro forma
Adjusted net debt (NZD $m)
1,814
Gearing ratio
22.2%
Debt to EBITDA ratio
0.9x
Supplementary adjusted historical pro forma financial ratios have been presented below to illustrate the likely impact of the proceeds from the transaction on these ratios as at 31 July 2025.
The supplementary adjusted historical pro forma financial ratios have been prepared on the basis that the
remaining proceeds from the transaction, amounting to approximately $800 million, are applied to debt
repayment as at 31 July 2025. The remaining proceeds are calculated as total transaction proceeds of $4.22
billion, less a $3.2 billion distribution to Fonterra Shareholders and estimated transaction costs of $200
million yet to be incurred. Debt repayments are assumed to occur on 31 July 2025. Accordingly, the
calculations do not reflect any potential impact on finance costs or the associated tax effects. In addition, the
calculations do not incorporate any potential settlement adjustments (for example, in relation to working
capital or net debt).
The proceeds from the transaction are not included in the historical pro forma financial information and ratios presented in the Summary of pro forma financial ratios below.

The Fonterra reported adjusted net debt, gearing and Debt to EBITDA ratios have been extracted from the Fonterra Group financial statements as at 31 July 2025.
The Fonterra historical pro forma adjusted net debt and gearing ratios have been calculated by adjusting the reported ratios to reflect:
•the exclusion of Mainland Group assets and liabilities classified as Held For Sale; and
•changes to the transaction perimeter not presented in Discontinued operations.
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.
The Fonterra historical pro forma Debt to EBITDA ratio has been calculated using Continuing operations normalised EBITDA (which excludes Soprole profit after tax of $8 million) as at
31 July 2025, adjusted to:
•remove the effects of Fonterra’s existing transfer pricing arrangements related to Mainland Group which will cease following the divestment;
•recognise the impact of the supply agreements between Fonterra and Mainland Group; and
•reflect changes to the transaction perimeter not classified as Held for Sale
Adjusted Net Debt, Gearing and Debt to EBITDA ratios
(tables presented on slides 55 - 57)
54

Fonterra historical pro forma adjusted net debt
As at 31 July 2025
NZD

million
Fonterra reportedPro Forma adjustmentsFonterra historical Pro Forma
Total borrowings (including lease liabilities)
3,138(1)3,137
Add: Bank overdraft
30(2)28
Less: Cash and cash equivalents
(309)7(302)
Add: Borrowings attributable to disposal groups held for sale
104(104)-
Less: Cash and cash equivalents attributable to disposal groups held for
sale
(94)94-
Add: Cash adjustment of 25% for cash held by subsidiaries
49-49
Less: Derivatives used to manage changes in hedged risks on debt
instruments
(298)-(298)
Adjusted Net Debt
2,620(6)2,614
Equity excluding hedge reserves
8,327(2,773)5,554
Total capital
10,947(2,779)8,168
Gearing ratio
23.9%32.0%
55

Fonterra historical pro forma normalised EBITDA
For year
ended
31 July 2025
NZD million
Fonterra reportedPro Forma adjustmentsFonterra historical Pro Forma
Profit after tax
1,079(151)928
Add: Net finance costs from continuing operations
184-184
Add: Net finance costs from discontinued operations
2(2)-
Add: Tax expense from continuing operations
372(12)360
Add: Tax expense from discontinued operations
95(95)-
Total Group operating profit (EBIT)
1,732(260)1,472
Add: Depreciation and amortisation from continuing operations
532-532
Add: Depreciation and amortisation from discontinued operations
103(103)-
Less: EBITDA relating to divestments
---
Add: Normalisation adjustments
106(106)-
Less: Share of profit of equity accounted investees
(10)-(10)
Less: Net foreign exchange gains from continuing operations
(9)-(9)
Less: Net foreign exchange gains from discontinued operations
(7)7-
Total normalised EBITDA excluding divestments, share of profit of
equity accounted investees and foreign exchange gains/losses
2,4471,985
56

Mainland Group historical pro forma adjusted net debt
For year
ended
31 July 2025
NZD million
Held for salePro Forma adjustments
Mainland Group historical Pro
Forma
Total borrowings (including lease liabilities)
1041105
Add: Bank overdraft
-22
Less: Cash and cash equivalents
(94)(7)(101)
Add: Borrowings attributable to disposal groups held for sale
---
Less: Cash and cash equivalents attributable to disposal groups held for
sale
---
Add: Cash adjustment of 25% for cash held by subsidiaries
---
Less: Derivatives used to manage changes in hedged risks on debt
instruments
---
Adjusted Net Debt
10(4)6
Equity excluding hedge reserves
2,846(73)2,773
Total capital
2,856(77)2,779
The Mainland Group historical pro forma adjusted net debt has been calculated by;
•Extracting relevant assets and liabilities held for sale in Fonterra Group consolidated financial statements as at 31 July 2025 (excluding $27m and $5m of unrelated assets and
liabilities); and
•Reflecting changes to the transaction perimeter not classified as Held for Sale.
57

Fonterra historical pro forma average capital employed and
return on capital
The Fonterra reported average capital employed and return on capital has been extracted from the Fonterra Group financial statements as at 31 July 2025.
The Fonterra historical pro forma average capital employed calculation extracts Total Fonterra Group assets and liabilities from the Fonterra Group consolidated financial statements as
at 31 July 2025 and deducts Held for Sale balances (excluding $27m and $5m of unrelated assets and liabilities). Pro forma adjustments were made to:
•Reclassify Mainland Group’s trade balances with Fonterra at 31 July 2025 (sourced from Fonterra’s accounting records), which will become external balances following the
transaction; and
•Reflect changes to the transaction perimeter not classified as Held for Sale.
The Fonterra historical pro forma return on capital has been calculated using Total Fonterra Group operating profit (EBIT). Pro forma adjustments were made to:
•Exclude operating profit (EBIT) in relation to discontinued operations;
•Exclude transaction costs directly related to the transaction as at that date;
•Remove the effect of Fonterra’s existing transfer pricing arrangements related to Mainland Group that will cease post-divestment;
•Incorporate the impact of the supply agreements between Fonterra and Mainland Group; and
•Reflect changes to the transaction perimeter not presented in Discontinued operations nor as Held for Sale.
(table presented on subsequent slide)
58

Fonterra historical pro forma average capital employed and
return on capital
For year
ended
31 July 2024For year
ended
31 July 2025
NZD million
Fonterra
reported
Pro Forma
adjustments
Fonterra
historical Pro
Forma
Fonterra
reported
Pro Forma
adjustments
Fonterra
historical Pro
Forma
Adjusted net debt
2,605(14)2,5912,620(6)2,614
Less: Cash adjustment
(47)-(47)(49)-(49)
Add: Cash and cash equivalents held by subsidiaries for operation
purposes
180(99)81161(74)87
Add: Equity excluding hedge reserves
8,247(2,736)5,5118,327(2,773)5,554
Less Net deferred tax
(73)(42)(115)(79)(77)(156)
Capital employed
10,9128,02110,9808,050
Impact of seasonal variation in capital employed
9929791,3681,297
Average capital employed (13 month rolling average)
11,9049,00012,3489,347
Operating profit (EBIT)
1,527(182)1,3451,732(260)1,472
Normalisation adjustments
66(91)(25)106(106)-
Normalised operating profit (EBIT)
1,593(273)1,3201,838(366)1,472
Add: Finance income on long-term advances
14-148-8
Less: Notional tax charge
(259)-(215)(498)98(400)
Normalised operating profit (EBIT) including finance income on
long-term advances less notional tax charge
1,3481,1191,3481,080
Return on capital
11.3%12.4%10.9%11.6%
59

Mainland Group historical pro forma capital employed and
return on capital
The Mainland Group historical pro forma average capital employed calculation extracts Held for Sale balances (excluding $27m and $5m of unrelated assets and liabilities). Pro forma
adjustments were made to:
•Reclassify Mainland Group’s trade balances with Fonterra at 31 July 2025 (sourced from Fonterra’s accounting records), which will become external balances following the
Transaction; and
•Reflect changes to the Transaction perimeter not presented in Discontinued operations nor as Held for Sale,
The Mainland Group historical pro forma return on capital has been calculated using operating profit (EBIT) for Discontinued operations, disclosed in Note 2(b) to the Fonterra Group
financial statements for the year ended 31 July 2025. Pro forma adjustments were made to:
•Exclude the Soprole profit after tax of $8 million;
•Exclude transaction costs directly related to the transaction;
•Remove the effect of Fonterra’s existing transfer pricing arrangements related to Mainland Group that will cease post-divestment;
•Incorporate the impact of the supply agreements between Fonterra and Mainland Group; and
•Reflect changes to the Transaction perimeter not presented in Discontinued operations nor as Held for Sale.
(table presented on subsequent slide)
60

Mainland Group historical pro forma capital employed and
return on capital
For year
ended
31 July 2024For year
ended
31 July 2025
NZD million
Held for sale
Pro Forma
adjustments
Mainland
Group historical
Pro Forma
Held for sale
Pro Forma
adjustments
Mainland Group
historical Pro
Forma
Adjusted net debt
16(2)1410(4)6
Less: Cash adjustment
------
Add: Cash and cash equivalents held by subsidiaries for operation
purposes
9549967774
Add: Equity excluding hedge reserves
2,842(107)2,7362,846(73)2,773
Less Net deferred tax
42-4277-77
Capital employed
2,996(105)2,8913,000(70)2,930
Impact of seasonal variation in capital employed
13-1371-71
Average capital employed (13 month rolling average)
3,009(105)2,9043,071(70)3,001
Operating profit (EBIT)
218(36)18217280252
Normalisation adjustments
-9191106106
Normalised operating profit (EBIT)
21855273172186358
Add: Finance income on long-term advances
------
Less: Notional tax charge
(57)(71)(45)(93)
Normalised operating profit (EBIT) including finance income on
long-term advances less notional tax charge
202265
Return on capital
7.0%8.8%
61

Scorecard and Glossary
13 Sept 2024

FY25 Integrated Scorecard
Key MetricsFY23 ActualFY24 Actual
FY25
ScorecardFY25 Actual
PeopleSerious harm¹1816126
Percentage of Health, Safety and Wellbeing priority actions fully completed by duedate76%77%95%96%
Culture Measure79798181
NatureGHGemissions(Scope1,2)²(14.1)%(18.5)%(21.1)%(20.7)%
Absolute water reduction across manufacturing sites (15% by FY30)²(6.7)%(12.4)%(13.1)%(14.7)%
RelationshipsShareofNewZealandmilkcollectedfortheseasonto31May79.0%78.1%78%77.8%
Delivered infull,ontime(DIFOT,ex-NewZealand)53.2%70.8%80%81.5%
Financial /
Assets &
Infrastructure
CashoperatingexpensesperkgMS(real)³1.381.391.461.40
Core Operations manufacturing cash costs perkgMS(real)⁴2.792.652.652.67
Returnoncapital(FY)12.4%11.3%8%-10%10.9%
FarmgateMilkPrice($)$8.22$7.83$7.75-$9.25$10.16
Alignment
Rights
Total shareholder return
(12-month Volume Weighted Average Price of FCG share plus dividend)⁵
$2.38
$1.00
$2.66
$0.55
$4.70
$0.57
On-farmprofitability($perhectare)⁶
$3,017$2,845Not AvailableNot Available
1.A broader definition, which also includes Contractors, was been adopted for FY25 resulting in an increased number of
injuries captured under the revised definition
2.Relative to FY18 Baseline. Scope 1&2 including energy and industrial emissions from farms under our
operationalcontrol
3.Based on New Zealand and Australia milk solids. FY25 excludes divestment related costs. Restated using FY25 as the
base year
4.Based on New Zealand milk solids collected. Excludes the cost of milk. Restated using FY25 as the base year
5.Value Weighted Average Price (VWAP) for the period 1 October to 30 September. FY25 Actual is 12-month VWAP to
16September 2025
6.DairyNZ Economic Survey 2023-2024 (Owner-Operator)
63

FY26 Integrated Scorecard
Key MetricsFY24 ActualFY25 Actual
FY26
Scorecard
PeopleSerious harm¹16
65
Quality of post-Health, Safety and Wellbeing incident actions
0.410.40.6
Culture Measure
798180
NatureGHGemissionsreduction (Scope1,2)²(18.5)%(20.7)%(26.7)%
Additional percentage of New Zealand supplying Farms achieving Emissions Excellence–(2.2)%6%³
RelationshipsShare of NewZealand milk collected for the season to 31 May78.1%77.8%78%
Delivered in full, on time (DIFOT, at time of arrival)66.1%73.7%77%
Financial /
Assets &
Infrastructure
Cash operating expenses per kgMS (real)⁴1.421.431.41
Core Operations manufacturing cash costs per kgMS (real)⁵2.712.722.72
Return on capital (FY)11.3%10.9%10%-12%
Farmgate Milk Price ($)$7.83$10.16$9.00-$11.00
Alignment
Rights
Total shareholder return
(Volume weighted average share price plus distributions (dividend, capital returns))⁶
$2.66
$0.55
$4.70
$0.57
Not Available
On-farm profitability ($ per hectare)⁷$2,845Not 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
4.Based on New Zealand and Australia milk solids. FY25 includes IT and digital transformationcosts. Targets are
aligned to FY26 base year, comparisons aligned to a FY25 base year are FY24: $1.39, FY25: $1.40
5.Based on New Zealand milk solids collected. Excludes the cost of milk. Targets are aligned to FY26 base year; targets
aligned to FY25 base year were FY24: $2.65, FY25: 2.66
6.For the period 1 October to 30 September. As an indication, FY25 is the 12-month VWAP to 16September 2025.
7.DairyNZ Economic Survey 2023-2024 (Owner-Operator)
64

Data sources
Dairy Production and Imports
•12-month production
•Australia, New Zealand, US (Jul 2024 to Jul 2025) Dairy Australia, DCANZ, USDA
•EU (Jun 2024 to Jun 2025), Eurostat
•3-month production
•Australia, New Zealand, US (May 2024 – Jul 2024 to May 2025 – Jul 2025) Dairy Australia, DCANZ, USDA
•EU (Apr 2024 – Jun 2024 to Apr 2025 – Jun 2025) Eurostat
•12-month imports
•China, LATAM, Asia (excl. China), Middle East & Africa (Jul 2024 – Jul 2025) S&P Global
•3-month imports
•China, LATAM, Asia (excl. China), Middle East & Africa (May 2024 – Jul 2024 to May 2025 – Jul 2025) S&P Global
65

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.
66
Non-GAAP Measures
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.
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
Glossary

Glossary
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
TM
brand
Gearing ratio (%)
is adjusted net debt divided by total capital. Total capital is equity
excluding hedge reserves, plus adjusted net debt
Global Markets
represents the Ingredients, Foodservice and residual Consumer
channels outside of Greater China.
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
Mainland Group
Mainland Group Holdings Limited is the parent company of the
Consumer and associated businesses at the divestment date
Net debt
means adjusted net debt
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 operating profit’
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
Product Channel
Fonterra has two product channels: Ingredients and Foodservice
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
67

---

Annual Report 2025
Pūrongo-ā-tau Te Mātāpuna

About this report
Welcome to our Annual Report, which forms part of
our end-of-year reporting suite.
We know there is a wide range of stakeholders who
are interested in our Co-op. This report provides an
end-to-end view of our business and how we create
value for farmer shareholders and unit holders at
every step of the value chain.
This starts with our farmers’ world-class milk, which
our operations collect and process for sale through
our Ingredients, Foodservice and Consumer channels.
Through our focus on sustainability and innovation,
we aim to add value to farmers’ milk, solve challenges,
and build a more resilient Co-op.
Our Annual Report includes our Sustainability Reporting,
Corporate Governance Statement, audited Financial
Statements and our Group Climate Statements.
In addition to the Annual Report, we have also released
our Milk Price Statement and Modern Slavery Statement.
This report covers the activities of Fonterra Co-operative
Group Limited for Financial Year 2025, commencing
1 August 2024 and ending 31 July 2025.
More information about Fonterra and our previous years’
performance can be found here: www.fonterra.com
Front cover: Harriet, Mila & Adam, Taranaki

Contents
Annual Review4
About us4
Chair Letter6
CEO Letter9
Our Strategy12
Financial Overview14
Our Progress16
Sustainability Reporting43
Approach44
Material Topics52
Data Consolidation78
Governance Disclosures80
Our Board81
Our Management Team82
Corporate Governance
Statement83
Remuneration Report98
Directors’ Disclosures110
Statutory Information112
Financial Statements119
Independent Auditor’s Report120
Financial Statements125
Notes to the
Financial Statements131
Group Climate Statements177
Introduction178
Governance179
Strategy183
Risk Management 199
Metrics and Targets201
Appendices227
Non-GAAP Measures228
Financial Historical Summary231
GRI Assurance Statement235
GRI Content Index237
Sustainability
Reporting Appendix240
GHG Limited
Assurance Report250
GCS Index254
Glossary258
Directory263
Bridgeman Farm, Taranaki

About Fonterra
We are a dairy Co-operative, owned
and supplied by thousands of farming
families in Aotearoa New Zealand.
Through the spirit of co-operation and a can-do
attitude, we share the goodness of milk with customers
in more than 100 countries around the world, from our
home base here in New Zealand.
We believe that food and nutrition are essential to
sustain us today and for future generations to thrive.
This is why we take great care with every drop of milk,
from farm through to customer.
Harriet, Adam, Mike, Donna, Mila & Lewanna, Taranaki
4
Fonterra Annual Report 2025
Annual ReviewFinancial StatementsSustainability ReportingGovernance DisclosuresGroup Climate StatementsAppendicesContents
Chair LetterCEO LetterOur StrategyFinancial OverviewOur ProgressAbout Us

Fonterra’s operations
Fonterra provides high-quality
dairy products to more than
100 countries globally through
our Ingredients, Foodservice
and Consumer sales channels.
In FY25, these channels
generated more than
$26 billion in revenue.
The data shown on this page
reflects Fonterra’s Total Group
operations, including the
Mainland Group (Consumer
and associated businesses)
proposed to be divested.
Revenue (NZD)
~2 6 b
Employees (FTE)
1
~15,700
Markets we export to
1 Employee figures only include permanent employees.
Figures presented have been rounded.
Europe
Employees (FTE)
130
Manufacturing sites
1
China
Employees (FTE)
640
North Asia
Employees (FTE)
100
Americas
Employees (FTE)
100
New Zealand
Employees (FTE)
11,570
Manufacturing sites
24
$3b
$1b
Rest of AMENA
Employees (FTE)
210
Manufacturing sites
1
$3b
$3b
$2b
$7b
Asia Pacific
Employees (FTE)
2,930
Manufacturing sites
12
$7b
5
Fonterra Annual Report 2025
Annual ReviewFinancial StatementsSustainability ReportingGovernance DisclosuresGroup Climate StatementsAppendicesContents
Chair LetterCEO LetterOur StrategyFinancial OverviewOur ProgressAbout Us

Kia ora farmers and shareholders
We are pleased to share the results of another financial
year of strong performance where we have met our
commitments to farmers and shareholders.
Our final Farmgate Milk Price of $10.16 per kgMS
exceeded opening expectations of $7.25 - $8.75 per
kgMS. Our earnings performance of 71 cents per share is
a reflection of the Co-op’s focus on its strategic priorities.
Miles and the team have made considerable progress
on strategy, announcing significant investments in our
Foodservice capacity, supply chain network, and new
partnerships with two major customers that acknowledge
farmers’ efforts to reduce on-farm emissions through
financial incentives.
Peter McBride
Chair
Chair Letter
Carrying
momentum
into an exciting
new phase for
our Co-op
6
Fonterra Annual Report 2025
Annual ReviewFinancial StatementsSustainability ReportingGovernance DisclosuresGroup Climate StatementsAppendicesContents
About UsCEO LetterOur StrategyFinancial OverviewOur ProgressChair Letter

Our strategy is delivering consistent results
In an increasingly volatile global market, it’s really pleasing
to deliver consistent performance for our farmers and
shareholders. This year’s results are an outcome of staying
focused on strategy.
When excluding the costs associated with the divestment
process of Mainland Group (Consumer and associated
businesses), Fonterra’s normalised earnings per share were
71 cents, in line with last year’s strong result.
The Co-op’s group Return On Capital of 10.9% is largely
consistent with last year and in line with the target
average range of 10-12%.
This year’s result was driven by improved performance in
our Ingredients business where we saw strong demand,
particularly for our protein portfolio. Operating profit for
our Ingredients channel was $1,101 million, up 17.4% on
last year.
The business proposed to be divested, Mainland Group,
also experienced improved performance thanks to
sales volume growth in the Consumer business, and the
Australia business having a stable milk price against higher
global commodity prices.
The total Consumer channel’s Return On Capital was 9.4%,
which is an improvement, but still well below our target
range on a market value basis. Farmers’ capital invested
into the Consumer business comes at the expense of
options for our higher-performing Ingredients and
Foodservice businesses.
We maintain a deliberately conservative approach to risk
and our balance sheet settings. Our year-end gearing ratio
of 24% is stable and below our target range. The strength
of our balance sheet enabled us to bring forward our
advance rate payments to farmers.
Total cash returns to shareholders
Our strong balance sheet and consistent underlying
performance gives the Board confidence to confirm a fully
imputed FY25 full-year dividend at the upper end of our
dividend policy at 57 cents per share. Combined with our
final Farmgate Milk Price, for a fully share backed farmer
this equates to total payout of $10.73 per kgMS for the
2024/25 season.
Overall, Fonterra has delivered $16.2 billion in total cash
returns to shareholders, up 30.6% on last year.
Divestment of our Consumer and
associated businesses
Over the past 15 months the Co-op has been testing the
value of our Consumer and associated businesses through
both a trade sale and the potential of an initial public
offering. The work has culminated in a $4.22 billion sale
agreement with Lactalis, which is due to be put to a farmer
vote on 30 October 2025.
It follows a highly competitive sale process with multiple
interested bidders. Alongside a strong valuation for
the businesses being divested, the sale allows for a full
divestment of the assets by Fonterra, at lower risk and
with a faster return of capital to the Co-op’s owners, when
compared with an IPO.
The Co-op is targeting a tax-free capital return of
$2.00 per share, which is approximately $3.2 billion,
following completion of the sale.
This is likely to be the last major asset sale for Fonterra,
and the Board will be taking a reasonably conservative
approach to the capital distribution. We know that
shareholders have no appetite for a future call on their
capital. The Board will be balancing a number of relevant
factors, including future capital requirements, growth in
our Foodservice and high-value Ingredients businesses,
and Fonterra’s debt and earnings outlook at the time.
FY25 full year dividend, fully imputed
57 cents
per share
Return On Capital
10.9%
down from 11.3%, up from 9.9% tax-adjusted
$16.2b
in total cash returns to shareholders
7
Fonterra Annual Report 2025
Annual ReviewFinancial StatementsSustainability ReportingGovernance DisclosuresGroup Climate StatementsAppendicesContents
About UsCEO LetterOur StrategyFinancial OverviewOur ProgressChair Letter

We acknowledge the deal represents a big decision for
farmers. They’ve invested in these brands over a long
period of time, so it’s a case of farmers’ heads fighting
with their hearts.
The Co-op is seeking a strong mandate for the sale, both
in terms of the level of support and participation. We will
be strongly encouraging farmers to vote at the Special
Meeting on 30 October 2025.
If endorsed by our farmers, there will still be regulatory
approvals to secure. We have no control over those
timelines but expect the transaction to be completed and
capital returned to farmers in the first half of calendar
year 2026.
The Board is confident that a sale to Lactalis is the highest
value option for the Co-op, including over the long term.
As the world’s largest dairy company, Lactalis has the scale
required to take the Consumer and associated businesses
to the next level. Fonterra stands to share in that success,
with Lactalis to become one of our most significant
Ingredients customers with whom we’ll work with closely
to build a long-term strategic partnership.
At the same time, the divestment removes a significant
level of complexity from Fonterra, allowing us to focus on
our world-leading Ingredients and Foodservice businesses,
which we believe will flourish.
An exciting new phase for our Co-op
Post-divestment Fonterra will be focused on B2B
Ingredients and Foodservice where we have a proven
advantage and global reach.
The key components of our strategy are to move more of
our farmers’ milk into higher returning products, improve
the efficiencies of our operations and be disciplined
with our capital. Manufacturing excellence and driving
efficiencies in our asset base will be key areas of focus for
us over this next period.
We remain confident in the future of New Zealand
dairy overall but need to acknowledge that we are
currently operating in a period of heightened uncertainty
and volatility.
Fonterra is experienced at navigating a complex
geopolitical outlook, uncertainty and protectionism,
having done so over many decades to get our product
into market. These challenges have ensured that we have
resilience built into our systems and supply chains.
The Co-op’s scale and market mix provides important
optionality that helps to mitigate geopolitical and trade
risk, and our strategy has been developed with this
outlook in mind. Our long-term relationships with key
strategic customers and supply chain partners also provide
a level of resilience.
Looking further out, the underlying demand picture for
dairy remains strong, driven by population growth, a
growing global middle class, and consumer preference
trends towards out of home dining, healthy aging and
active living – where our innovation has us well positioned
to succeed.
Ngā mihi,
Peter
“The key components of our
strategy are to move more
of our farmers’ milk into
higher returning products,
improve the efficiencies of our
operations and be disciplined
with our capital. Manufacturing
excellence and driving
efficiencies in our asset base
will be key areas of focus for us
over this next period.”
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Kia ora tātou
I’m proud to share with you Fonterra’s FY25 annual results,
which show the Co-operative has delivered record returns
to shareholders while also making significant progress
on strategy.
The momentum we’ve built over the last few years has
carried into FY25. We’ve seen continued demand from
global customers for our high-quality products and this
has driven total cash returns of $16.2 billion, equivalent
to $10.73 on average for every kilogram of milk solids our
farmer owners supplied.
These returns are made up of a final Farmgate Milk Price
for the 2024/25 season of $10.16 per kgMS, equating to
$15.3 billion in milk payments to New Zealand farmers, and
a full year dividend of 57 cents fully imputed, equating to
$916 million to shareholders and unit holders.
Miles Hurrell
Chief Executive Officer
CEO Letter
One of our
strongest
years yet for
shareholder
returns
9
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FY25 performance
We are committed to delivering strong shareholder
returns through focused execution of our strategy.
Our performance is driven by a stable milk supply
and improving our product mix, as well as maintaining
efficient operations and having a clear capital plan.
Looking first at milk supply, the Co-op’s milk collections
increased 2.6% in the 2024/25 season to 1,509 million
kgMS and we had important wins in terms of retaining
and attracting milk, gaining more milk from competitors
than we lost.
As part of improving our product mix, we allocated more
of our milk solids to our high-value products and reduced
the allocation of solids to reference commodity products,
while maintaining tension in the Farmgate Milk Price.
Our Ingredients business saw robust demand for cheese
and specialty proteins such as MPC85 which is used in
ready-to-drink protein beverages. Meanwhile, Foodservice
sales volumes continued to grow off the back of continued
demand in Greater China and key Asia markets for
products including UHT cream, butter and mozzarella.
Looking at our costs, we are focused on making efficiency
improvements in our New Zealand manufacturing base.
We improved core operations manufacturing costs per
kgMS collected, reflecting efficiency gains from higher
milk collections and performance improvement initiatives.
The Co-op’s total cash operating expenses increased
compared to last year, due to investment in a once-
in-a-generation Enterprise Resource Planning (ERP)
system replacement as well as costs associated with the
Mainland Group (Consumer and associated businesses)
divestment process.
Our balance sheet and leverage metrics are in line with
last year, maintaining the Co-op’s robust position and
providing optionality for the future.
During FY25, we made key changes to the Fonterra
management team. Matt Bolger rejoined the Co-op
after five years away, stepping into the role of Managing
Director Co-operative Affairs, as Mike Cronin dedicated
his focus to leading the Consumer and associated
businesses divestment process.
We also shifted to a channel-led management structure
on 1 August 2025, with Richard Allen appointed President,
Global Ingredients and Teh-han Chow appointed
President, Foodservice. This change enables our teams
to have a clear end-to-end view of our sales channels and
strengthens their ability to deliver end-to-end value.
We’re continuing to invest in new manufacturing capability
to meet growing customer demand for our high-value
Ingredients and Foodservice products.
During the year, we commenced construction on new
manufacturing capacity at our Studholme and Edendale
sites, with the first protein products from Studholme
expected in early 2026, and UHT cream from Edendale
expected late 2026.
We have a pipeline of further potential growth
investments we’re assessing, with plans to invest
up to $1 billion over the next three to four years
in projects to generate further value and drive
operational cost efficiencies.
Projects being assessed include:
–Growing the value of our existing protein portfolio,
in addition to the recently announced investment
at Studholme, to support our Ingredients business.
–Adding value to milkfat through new butter
and cream cheese investments to support both
Foodservice and Ingredients businesses.
–Investments in site operations including data,
AI and automation.
This is alongside investment in our foundations to support
ongoing resilience of the Co-op. During FY25, construction
commenced on a new coolstore at our Whareroa site and
new coal-free boilers at our Clandeboye and Edendale
sites to support secure energy supply.
We also continue to forecast investment in wastewater
upgrades and decarbonisation projects, including
investments into electric boilers at our Whareroa,
Edgecumbe and Waitoa sites, as we make progress
towards our sustainability targets.
“Our total dividend of
57 cents per share includes a
22 cent interim and 35 cent
final dividend.”
10
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Divestment of Consumer and
associated businesses
During FY25, we took a significant step in the implementation
of our strategy by progressing the divestment of our
global Consumer and associated businesses.
We ran a robust divestment process, pursuing both a trade
sale and initial public offering (IPO) as divestment options,
which resulted in an announcement in August 2025 that
Fonterra has agreed the sale of the businesses to Lactalis
for $4.22 billion.
The sale is subject to approval from farmer shareholders,
as well as separation of the businesses from Fonterra and
certain regulatory approvals.
As Peter has covered, the decision to divest is a significant
one for our farmer shareholders to consider.
Board and management are aligned in the view that a
divestment is the right thing for the Co-op, as it will allow
us to focus on what we do best and deliver further value
for farmers and ultimately New Zealand.
While there are always potential risks on the horizon,
we are confident that through focused execution of
strategy, we can continue to grow end-to-end value
for farmer shareholders.
The strategic targets and policy settings we announced
in September 2024 remain unchanged if Mainland
Group is divested, including a target average Return
on Capital of 10-12% from FY26, which is above
Fonterra’s 5-year average.
Our operating profit and earnings per share will be
impacted in the short term by divestment of Mainland
Group, but we are targeting earnings to return to
current levels in three years.
We have amended our Debt to EBITDA target to less
than 3 times and maintained our target gearing ratio of
30-40%, reflecting an appetite to maintain conservative
balance sheet settings.
While there are always risks that may impact future
performance, we also continue to target dividend
payments within our policy range of 60-80% of earnings in
the medium term.
FY26 priorities
While we’re looking ahead to the future, we’re also keeping
focused on continuing to deliver for shareholders and unit
holders in the short-term.
Our 2025/26 season forecast Farmgate Milk Price is $10.00
per kgMS with a range of $9.00 - $11.00 per kgMS and
we’re forecasting milk collections of 1,525 million kgMS.
Our FY26 forecast earnings from continuing operations,
which excludes the businesses to be divested, is 45-65
cents per share.
Global demand for our products continues to be stable.
However, global milk supply is increasing and the risk of
potential volatility in commodity prices and exchange rates
from geopolitical dynamics remains.
We continue to focus on what we can control, including
progressing initiatives to deliver our strategy.
Our FY26 priorities are:
–Divestment process – supporting a farmer shareholder
vote on the proposed divestment and, if approved,
completing the sale to Lactalis and returning capital
to shareholders and unit holders.
–New manufacturing capacity – Edendale UHT cream and
Studholme proteins completed in 2026 and new butter
and cream cheese investments progressed.
–Co-op foundations – Go-live of the ERP system
replacement at the first sites in November 2025.
Our ongoing balance sheet strength, combined with
our focused strategic direction, means the Co-op is
well prepared for the future and positioned to continue
delivering strong returns to shareholders and unit holders.
Ngā mihi,
Miles
11
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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
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Deliver the
strongest farmer
offering
–Announced new funding initiatives
to help farmers reduce on-farm
emissions, such as the new
Emissions Excellence achievement.
–Announced new and expanded
price risk management services to
give farmers more certainty around
the Farmgate Milk Price, enabling
them to manage risk for a portion
of their revenue.
Unleash our
Ingredients
engine
–Richard Allen appointed as President,
Global Ingredients.
–Piloted a new digital sales channel,
MyNZMP Link, giving customers in
the US and EU faster, more flexible
purchasing.
–Began construction on a new $75
million investment into an advanced
proteins hub at Studholme to
increase capacity for high-return
products and support partnerships
with customers seeking specialised
dairy solutions.
Keep
momentum in
Foodservice
–Teh-han Chow appointed as
President, Global Foodservice.
–Began construction of the new
$150 million UHT cream plant at
Edendale with the new build a
key part of growing value in Asia
through high-margin, high-demand
dairy products.
–Opened an application centre
in Wuhan, our sixth in China,
strengthening our presence in
central China and enabling faster
development of dairy applications
tailored to local market trends.
More on page 16More on page 20More on page 25
Invest in
operations for
the future
–Began construction on a new $150
million investment into a coolstore
at Whareroa to boost storage, keep
products fresher for longer and
build resilience in our supply chain.
–Closed our Canpac site due
to shifting market trends and
demographic changes, enabling us
to redirect milk solids into higher-
value streams.
Build on our
sustainability
position
–Celebrated our first electrode
boiler opening at Edendale and
announced a further $70 million
investment in two additional
electrode boilers at the site.
–Announced our largest
decarbonisation investment
to date at Clandeboye – the
conversion of two coal boilers to
renewable wood pellets.
–Achieved our target of 100% of
New Zealand farms having a Farm
Environment Plan.
Innovate to
drive our
advantage
–Developed next generation Frozen
Whole Milk Concentrate (Gen 2
FWMC) to meet the demand for
premium fresh dairy across Asia.
A fresh milk alternative FWMC
utilises breakthrough technology
proprietary to the Co-op.
–Launched Anchor Easy Bakery Cream
by making targeted adjustments to
an existing formulation, improving
functionality while reducing
production costs, delivering a full
dairy product at a competitive price.
More on page 31More on page 35More on page 40
Progress on strategy
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Financial Overview
Reported operating profit
$1,732m
From 1,527m
Reported profit after tax
$1,079m
From 1,128m
Reported earnings per share
65c
From 67c
Normalised earnings per share
71c
No change
From 58c tax adjusted
Farmgate Milk Price
$10.16
From $7.83
Dividend
57c
From 55c
Return On Capital
10.9%
From 11.3%
From 9.9% tax adjusted
Adam, Mila & Harriet, Taranaki
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Normalised continuing operations operating profit
of $1,441 million is up $190 million on the prior
comparable period
3,4
.
The higher operating profit was driven by our reportable
segments Global Markets and Core Operations, with
operating profit of $727 million and $302 million,
up $94 million and $187 million, respectively. Both
business units benefited from the stronger Ingredients
channel performance.
Greater China operating profit of $412 million, was down
$91 million due to margins being impacted by higher cost
of milk and the allocation of costs associated with the
Enterprise Resource Planning (ERP) system development.
The Group is transitioning to a channel-led structure,
effective 1 August 2025:
–Ingredients channel operating profit of $1,101 million,
up $163 million, reflecting strong margins and favourable
hedging in the Non-Reference portfolio. Refer to
Unleash our Ingredients engine for further information.
–Foodservice channel operating profit of $340 million,
up $27 million, reflecting sales volume growth from
continued demand in Greater China for UHT cream,
butter and mozzarella partially offset by higher
input costs impacting gross margins. Refer to Keep
momentum in Foodservice for further information.
–Mainland Group (Consumer and associated businesses)
have met the criteria to be classified as held for sale and
performance related to the Consumer and associated
businesses are now presented as discontinued
operations. Refer to Divestment of Mainland Group for
further information.
Normalised discontinued operations operating profit
4,5

of $397 million is up $55 million on the prior comparable
period due to Consumer having higher volumes and better
pricing, and the Australia business having a stable milk
price against higher global commodity prices.
Total Group operating expenses of $2,594 million is up
$126 million.
–continuing operations up $92 million
4
mainly due to the
increased investment in our ERP system
–discontinued operations up $32 million
4
due to
$106 million in costs associated with the divestment
process of Mainland Group. Normalised operating
expenses from discontinued operations are down
$6 million due to the prior year including $99 million
operating expenses from DPA Brazil
Capital invested for the period was $930 million, slightly
below our target spend of $1 billion. Refer to Invest in
operations for the future for further information.
Net debt was $2.6 billion, in line with last year as cash
flows supported increased dividend payments and paying
farmers sooner during the 2024/25 season.
3 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.
Refer to note 1a in the FY25 Financial Statements.
4 Comparative information has been re-presented for consistency with the
current period.
Increased milk flows on farm and another
strong earnings performance have enabled
the Co-operative to generate $16.2 billion
in total cash returns.
–the 2024/25 Farmgate Milk Price $10.16 per kgMS,
equating to $15.3 billion in milk payments to farmer
owners, up $3.8 billion or $2.33 per kgMS on the
prior year
–a fully imputed full year dividend for FY25 of 57 cents,
equating to $916 million to shareholders and unit holders
–equivalent to $10.73 on average for every kilogram of
milk solids our farmer owners supplied
1
Total Group operating profit increased $205 million
to $1,732 million. This is the third consecutive year of
strong earnings, reflecting a step change in the Co-op’s
performance as it continues to focus on its strategic
priorities. Total Group profit after tax for the year is $1,079
million, down $49 million due to an increase in tax expense
of $232 million, with $216 million attributable to changes in
tax treatment that will be attached as imputation credits
2
.
Excluding costs associated with the divestment process
of Mainland Group and non-controlling interests,
normalised earnings per share attributable to equity
holders is 71 cents and the Board has declared a fully
imputed final dividend of 57 cents per share. This
was made possible by the earnings performance and
optionality created by Fonterra’s resilient balance sheet.
The dividend payment date is 15 October 2025.
1 For a supplying farmer at 100% of their share standard.
2 Fonterra has exhausted its NZ tax losses and NZ tax expenses will generate
imputation credits from FY25 onwards. As part of the change, dividends on
supply backed shares are no longer treated as tax deductible by Fonterra.
5 Normalisations comprise of $106 million of Mainland Group divestment costs
(2024: $(66) million loss on sale of DPA Brazil) and Inter-group transactions of
$119 million (2024: $91 million) reflecting trade terms for sales and purchases
between the Group and Mainland Group that are not expected to continue
following the divestment.
15
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Deliver the
strongest
farmer
offering
Matt, Lewanna & Adam, Taranaki
Fonterra’s strategy is focused on growing
end-to-end value for farmer shareholders.
Having milk supply at sufficient scale is
key to achieving this. Our strategic choice
to deliver the strongest farmer offering is
grounded in our core purpose as a Co-op
– to provide stability and manage risk on
behalf of our farmers, while ensuring they
retain ownership and control.
We’re focused on making our
offering as competitive as
we can through the value we
deliver to Co-op farmers.
Total cash returns
$16.2b
up 30.6%
Milk collections
1,509m kgMS
up 2.6%
Final Farmgate Milk Price
$10.16per kgMS
up from $7.83 per kgMS
16
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On-farm

Having a competitive offering includes maximising the
total payout we deliver to farmer shareholders through
the milk price and earnings-based returns. It is also about
providing industry-leading support where it matters most
for farmers – whether that’s working alongside them
to boost productivity, reducing their costs through our
Farm Source retail offerings, or helping them continue to
make sustainability improvements. In addition, we have
a real focus on supporting farmers who are just coming
into farm ownership and those with aspirations to do
so in the future.
This year, the Co-op has returned a record $16.2 billion
in total cash payments to its farmer shareholders.
The Farmgate Milk Price for the 2024/25 season
returned $10.16 on average for every kilogram of
milk solids our farmers supplied, a record Milk Price
payout for the Co-op
1
. Combined with a fully imputed
dividend of 57 cents per share, this means a total payout
of $10.73 per share backed kgMS.
For the 2024/25 season, changes to the advance rate
schedule included a higher opening advance rate of 75%
and the strength of our balance sheet enabled us to further
increase advance payments throughout the financial year,
with the July retro payment increasing to 90%. This meant
cash was able to get to farmers sooner. For the 2025/26
season, we are maintaining the opening advance rate of
75%, increasing to 80% by December paid January and 85%
for the July retro payment.
The Co-op has had a strong start to the 2025/26 season,
announcing and maintaining the opening forecast of
$10.00 per kgMS. Furthermore, new incentives are on offer
from the 2025/26 season, including a new Co-operative
Difference payment, access to customer-funded on-farm
solutions and tools, as well as a customer-funded payment
for eligible farmers.
Overview of the newly introduced
Co-operative Difference payment
–1-5 cents per kgMS payment: To date, a total of
up to 10 cents per kgMS has been possible across all
achievements within the Co-operative Difference. A
new Emissions Excellence achievement for the 2025/26
season will see a further payment of between 1-5 cents
per kgMS paid to farms that meet certain criteria.
1 On a nominal basis.
2 Net costs consists of cash costs and capital costs, refer to the Farmgate Milk Price Statement 31 May 2025 for further detail.
In the 2024/25 season, 91% of Fonterra farmers achieved
the Co-operative Difference, a 4% increase on the
2023/24 season.
We congratulate all farmers who have achieved one
of the three levels within the framework during the
2024/25 season.
–Te Pūtake (The start of the journey) 1,383 farmers,
down from 1,429
–Te Puku (The centre) 5,179 farmers, up from 5,050
–Te Tihi (The peak) 908 farmers, up from 858
View the Co-operative Difference Honour Roll full list
Milk Price drivers
($ per kgMS)
7. 8 3
0.04
2.11
0.22
10.16
(0.04)
24/25 season
Farmgate
Milk Price
Net costs2Foreign exchangePricesVolume23/24 season
Farmgate
Milk Price
Driven by milk collections
increasing from 1,471 to
1,509 million kgMS
Reference Product prices 20.7% higher on
average compared to the prior season with
WMP, Butter and AMF prices increasing
21.6%, 27.0% and 23.4%, respectively
The average hedge rate
decreased from NZD/USD
0.6120 to NZD/USD 0.5988
Increased mainly due
to increases in milk
collections, energy,
staff, packaging and
ERP costs
17
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On-farm

New price risk management services
We have expanded our price risk management services
which enable farmers to secure certainty for a portion
of their revenue. The new services build on the Fixed
Milk Price programme, introduced in 2019, which
continues to see strong demand. Farmers can use
any combination of the price risk management services
for up to 50% of their estimated production in a season.
These services are optional for those farmers who may
want more certainty, and they also deliver benefits
for the whole Co-op through the solutions we can
offer customers.
Launched in June, the new services offer more support
and flexibility. Farmers can now:
–Lock in a Fixed Milk Price for an additional season,
providing longer-term certainty.
–Lock in a minimum Milk Price for the current season
to protect against drops while allowing upside.
–Lock in a Milk Price Range for the current season.
Kylie, Manawatū-Whanganui
Overview of the newly introduced customer
incentives, funded through separate
agreements with Mars and Nestlé
–On-farm solutions: Based on last season’s achievements,
it’s estimated that around 90% of farmers will be
eligible to take up this offer. Farmers who achieve the
Co-operative Difference can receive up to $1,500 in
funding for on-farm tools or services designed to further
improve emissions efficiency.
–Emissions Incentive Payment: Farmers who achieve
the Co-operative Difference and have one of the lowest
emissions footprints in the Co-op – approximately 30%
lower than the average farm – will receive an additional
payment of 10-25 cents per kgMS.
Fonterra’s milk collections for the 2024/25 season were
1,509 million kgMS, the strongest the Co-op has had since
the 2021/22 season. The higher collections were supported
by good early season pasture availability due to favourable
weather conditions across most regions. Farmers are
also producing more milk solids per cow, due to ongoing
breeding improvements and high animal welfare standards.
The Co-op is continuing to work closely with farmer
shareholders to support efficiency gains into the future.
“2024/25 season collections
of 1,509m kgMS is the
strongest the Co-op has had
since the 2021/22 season”
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On-farm

ASB First Farm Award
A key focus in terms of delivering the strongest
farmer offering is supporting the next generation
of Co-op owners. As part of a wider programme
of work in this area, Fonterra and ASB launched
the First Farm Award in May 2025 at the New
Zealand Dairy Industry Awards. This initiative offers
early-career farmers a more accessible pathway to
farm ownership, with a tailored package including
mentoring, enhanced support, special offers and
a launch kit containing contributions from Farm
Source partners.
The 2025 award recipients – Reece and Natasha Cox
(Taupō), Braden and Brigitte Barnes (Canterbury),
and Margaret and Cameron Bierre (Waikato) –
each receive up to $1 million in ASB Business Term
Lending fixed at 1% p.a for three years, along with
$20,000 in Farm Source account credit.
for the current 2025/26 season, and has a solid pipeline of
new farms and farms currently supplying other companies
agreed to joining Fonterra, some of which can’t come
across immediately as they are bound to existing contracts.
The Co-op remains focused on offering a competitive value
proposition with the aim of maintaining or growing its
market share.
Collaboration saves time on compliance
To further support farmers, we collaborated with industry
players including Ballance Agri-Nutrients, LIC, Ravensdown,
CRV, FarmIQ and Trev, to initiate an open data-sharing
ecosystem, where Fonterra farmers can submit information
once, and the shared data can pre-populate up to 70% of
their annual Farm Dairy Records.
This collaboration has led to new solutions being made
available to farmers that are designed to save them time
through better data connections, reduced task duplication
and simplified administrative tasks – including streamlined
record completion and reduced on-farm assessments.
The improvement programme has already generated
estimated savings of 500,000 hours of admin time for
Co-op farmers, with another 500,000 hours expected
to be delivered in the 2025/26 season.
Currently, around 70% of Fonterra farmers have connected
their data to at least one partner, with 63% reporting an
improved experience compared to last year. This initiative
was recognised with the ‘Team and Collaboration Award’
at the 2025 Primary Industries New Zealand Awards.
Fonterra supplier base and milk collections
1
(Full season figures)
Fonterra collected milk from 8,265 supplying farms around
New Zealand in the 2024/25 season. Market share, by
milk solids, dropped from 78.1% to 77.8% year-on-year,
mainly due to increased competition in the North Island
heading into the start of the season. Through the course
of the year, the Co-op had some important wins in terms
of retaining and attracting milk. Fonterra gained more
milk from competitors than it lost in the 2024/25 season,
however still faced a net decline due to land use change
away from supplying milk. The Co-op is well positioned
20252024202320222021
79.0%
1,539
8,897
8,841
8,637
8,410
8,265
171167172175
184
1,478
1,480
1,471
1,509
79.1%79.0%
78.1%
7 7. 8 %
KgMS collected (million)
Average collections per farm (thousand kgMS)
Average farms2
Milk collection market share
1 New Zealand milk collections.
2 Average number of farms supplying milk for the season.
19
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On-farm

Unleash our
Ingredients
engine
Deepen our position as a
world-leading provider of
high-value dairy ingredients,
to grow both the Farmgate
Milk Price and earnings.
To implement the Co-op’s strategy and
transition to a channel-led business
structure, Richard Allen was appointed
President, Global Ingredients in March
2025
1
. Richard joined the Co-op in 2008
and has held a range of senior leadership
roles, including leading Foodservice
in Greater China and Farm Source in
New Zealand. Most recently, he served as
President Atlantic, overseeing operations
across the Americas and Europe, and
managing key global Ingredients accounts.
His role now brings all our Ingredients
markets together – from China to Europe –
with a clear focus on growing the value of
farmers’ milk.
Ingredients operating profit
2,3
$1,101m
up 17.4%
Ingredients Return on Capital
2,3
11.9%
up from 11.8%
1 Title changes were effective 12 March 2025. The structural changes associated with
these appointments came into effect 1 August 2025.
2 Prepared on a continuing operations basis.
3 Comparative information has been re-presented for consistency with the current period.
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Maximising value in volatile markets
Following Richard’s appointment, the Ingredients business
is rolling out a multi-year plan outlining the steps needed
to deliver on our vision and strategy, maximise value
through long-term innovation, and adjust operations to
better manage increased global volatility and uncertainty.
Through this, new tools are being introduced to bring
greater consistency and stability to how we sell and better
support market-linked pricing, integrate the physical and
financial portfolios, and better manage volatility risk during
challenging market conditions so returns are less affected.
The plan focuses on:
–Putting customers at the centre, ensuring we focus our
time and energy on the relationships that deliver the
best value
–Smarter ways of selling, so prices accurately reflect the
market and farmer returns are stable against volatility
–Making the most of every drop of milk, optimising
product mix through the sales channels to
maximise earnings
By focusing on the right customers, using smarter tools,
and investing in the future, we’re helping New Zealand’s
grass-fed milk earn a premium and deliver the best possible
returns to shareholders.
New Zealand’s way of farming is one of our greatest
strengths and a key competitive advantage through the
production of natural, grass-fed dairy. This was further
reinforced with the launch of the New Zealand Grass-
fed Standard by the Ministry for Primary Industries with
our farmers already exceeding the requirements. This
certification is highly valued by global customers and
consumers, setting New Zealand farmers’ milk apart from
the rest of the world.
Dave, Southland
Richard Allen
President, Global Ingredients
21
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Our Ingredients channel had a strong year with operating
profit up $163 million to $1,101 million, due to strong
Ingredients’ margins and favourable hedging in the
Non-Reference portfolio.
In FY25 we began reshaping how we work with customers
to better meet their diverse needs. Some are looking
for fast, flexible digital ordering experiences – like those
now using our new MyNZMP Link platform in the US and
Europe. Others are keen to partner with us on innovation,
particularly in areas like sports and medical nutrition.
And many simply want a reliable, grass-fed source of milk
powders, cheese and butter. By tailoring how we serve
each of these customer groups, we’re deepening loyalty
and unlocking more demand for our New Zealand milk.
53.9% of milk solids were allocated to the Reference
product portfolio, compared to 55.4% the prior year.
This reduction supports our strategic objective to increase
allocation to our higher margin Non-Reference Ingredients
and Foodservice products.
Ingredients operating performance
1
(NZD million)
938
(13)
260
1,101
(84)
FY25
operating profit
Operating expenses
and other
MarginVolumeFY24
operating profit
Reduction in volume due
to allocating more solids to
higher value Foodservice
channel, in line with
Fonterra’s strategy
Favourable margins due to timing
of contracting and hedging of the
Non-Reference portfolio
Reflects $106 million
in ERP costs
1 Prepared on a continuing operations basis. Comparative information has been re-presented for consistency with the current period.
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The Co-op remains focused on shifting solids into higher
value Non-Reference products with demand continuing to
strengthen for functional proteins in higher value markets,
particularly Europe and the US. 53.8% of milk solids were
allocated to the Reference Product portfolio, compared
to 55.4% in the prior year, supporting our strategic
objective to shift solids into higher margin products.
The Non-Reference portfolio product mix shifted to
maximise value, with lower sales volumes of casein which
have higher solids density and higher sales volumes of
cheese which have a lower solids density, this led to a
lower percentage allocation of solids to the Ingredients
Non-Reference portfolio.
Uday & Tomas, Auckland
New digital platform creates faster, more flexible buying
MyNZMP Link supports our priority to rewire
the pricing and sales process and provide better
consistency and stability to how we sell. The pilot of
this tool is set to run until mid-2026, giving customers
in the US and Europe secure, direct access to NZMP
ingredients from regional warehouses. Developed with
Nui Markets, the platform responds to the demand
for faster, more flexible purchasing – especially for
real-time pricing and supply visibility. The pilot has
seen strong uptake, appealing not only to digitally
self-servicing customers, but a broader range of initially
expected customers. The platform features 15-minute
auctions, weekly tenders, fixed-price listings, and bid/
counter-offer negotiations, and enables customers to
secure volumes up to 12 months in advance. It currently
offers eight ingredients including lactose, whey protein
concentrate, milk protein concentrate, caseins and
caseinates. Five more are planned, including high-fat
whey protein concentrate and expanded caseinate
and lactose specifications.
Improved mix as solids shifted to high value ingredients
Full financial year figures
1,2
20272026202520252024
Strategic targets
Excluding Mainland
1,160
55.4%
53.8%
56.0%
54.0%
23.0%
22.6%
54.0%
31.0%
29.0%
30.0%
78.4%
76.4%
85.0%85.0%
84.0%
1,138
Non-Reference
Reference
million (kgMS)
1 kgMS data presented on a sales basis. Percentages are a proportion of
total kgMS sold.
2 Comparative information has been re-presented for consistency with
the current period.
23
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The Co-op’s Ingredients channel currently supplies more
than 1,000 customers in over 100 countries and has
been focused on consistently building demand for high-
returning products. An example of this has been the
development of our functional protein range.
Our functional protein range has been a key platform
behind strong results in higher-value markets such as
Europe, the US, Japan and China. To cater to growing
demand and strengthen our Ingredients channel offering,
the Co-op is continuing to invest in capability including two
large-scale investments:
–a new $75 million investment into an advanced proteins
hub at our Studholme site will increase capacity for
high-return products and support partnerships with
customers seeking specialised dairy solutions serving
the fast-growing, high-protein market for medical and
sports nutrition. Construction has progressed well
over FY25, with works nearing completion and the first
product expected off the line in 2026. This investment
is a key part of our strategy to grow production capacity
in high-value ingredients, enabling us to meet rising
global demand while delivering tailored, science-backed
solutions. With the high-protein dairy market projected
to grow by nearly USD10 billion over the next four
years at an annual rate of 7%, the Studholme expansion
positions us to deepen customer relationships, attract
new business, and capture more value from every drop
of milk. Following completion, the investment will unlock
additional capacity in our Non-Reference portfolio.
–a new $150 million investment in a cool store at
our Whareroa site to boost storage, keep products
fresher for longer and build resilience in our supply chain.
Construction began in November 2024 and supports
our strategic priority to invest growth capital in new
capacity to increase milk allocated to higher margin
Non-Reference products. Once complete in 2027, the
19,000 m2 facility – equivalent to three rugby fields –
will increase Whareroa’s storage capacity by 5,000 MT,
enabling storage of up to 26,000 MT of cheese.
Opening more doors
Free Trade Agreements (FTAs) are unlocking new
opportunities. Access to high-value markets, through
FTAs, provides the Co-op with market optionality,
resilience and strong returns for farmer shareholders.
New Zealand-United Kingdom FTA
Two years since its introduction, the New Zealand-
United Kingdom FTA has removed tariffs on
New Zealand dairy, unlocking demand for grass-fed
butter, cheese, anhydrous milk fat, proteins and
skim milk powder after 50 years of limited access.
As the world’s second-largest dairy importer, the
United Kingdom offers strong growth potential,
with consumers seeking premium quality and
sustainability credentials – aligning with the Co-op’s
grass-fed farming, low transport emissions and animal
welfare standards.
As we move forward, we’re taking a strategic
approach to this market – focusing on efficiency,
simplicity, and selecting the right partners and channels
to position New Zealand dairy as a premium offering.
New Zealand-Europe FTA
In the first 14 months since the New Zealand-Europe
FTA took effect, demand has grown across butter,
cheese, proteins and whole milk powder. Europe is
now our largest market for functional whey protein
concentrate – used in protein-enriched yoghurts
and nutrition products – sourced from New Zealand
and the Heerenveen site in the Netherlands.
Our specialised ingredients, grass-fed dairy and
sustainability credentials give us a competitive
edge in the region, positioning us to meet rising
demand for health-driven nutrition solutions.
24
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Keep
momentum
in Foodservice
Foodservice operating profit
2,3
$340m
up 8.6%
Singapore, South East Asia
To implement the Co-op’s strategy and
transition to a channel-led business
structure, the Global Foodservice business
appointed Teh-han Chow as President,
Global Foodservice in March 2025
1
. Prior to
his appointment, Teh-han held a number
of roles in the Co-op, including CEO for
Greater China and President of Fonterra’s
Ingredients business, NZMP, in Greater
China, South and East Asia.
In this new expanded global role, Teh-han
continues as CEO for Greater China while
also leading Foodservice operations across
Greater China, North Asia, Southeast Asia,
Latin America and across the Global Quick
Service Restaurant (GQSR) channel.
Expand our successful
Foodservice business in, and
beyond China, to grow earnings.
Foodservice Return On Capital
2,3
10.1%
down from 12.8%
1 Title changes were effective 12 March 2025. The structural changes associated with
these appointments came into effect 1 August 2025.
2 Prepared on a continuing operations basis.
3 Comparative information has been re-presented for consistency with the current period.
25
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A focus on accelerating growth
The formation of the new channel-led structure has
brought a stronger focus to our Foodservice business, one
of accelerating growth through four key enablers:
–Leveraging Greater China learnings across the
other regions
–Scaling digital platforms globally
–Building commercial, culinary, marketing and
sales capability
–Driving fast and scalable innovation.
These pillars will help us to unlock new value, strengthen
market presence and deliver more value for our customers
across Asia and beyond.
Our Foodservice channel has delivered a stable
performance with operating profit up $27 million
to $340 million due to strong volumes with continued
strong demand, partially offset by the pressure of rising
input costs.
Foodservice solids increased, in line with strategic targets
as demand continued to grow for UHT cream, butter and
IQF mozzarella.
Foodservice operating performance
1
(NZD million)
313
80
(65)
340
12
FY25
operating profit
Operating expenses
and other
MarginVolumeFY24
operating profit
Continued strong
demand for UHT
cream, butter and
IQF mozzarella
Reflects pressure
from rising input costs
Prior year included Greater
China brand impairment
and higher strategic
initiative spend partially
offset by ERP costs
Teh-han Chow
President, Global Foodservice
1 Prepared on a continuing operations basis. Comparative information has been re-presented for consistency with the current period.
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1 kgMS data presented on a sales basis. Percentages are a proportion
of total kgMS sold.
2 Comparative information has been re-presented for consistency with the
current period.
Miles & Teh-han, Shanghai
Innovation driving growth
Unlocking new opportunities in China
In November 2024, we announced the launch of Anchor
Easy Bakery (AEB) Cream at the China International
Import Expo (CIIE) in Shanghai. Developed to meet
growing demand in China’s bakery segment, AEB
expands the Co-op’s Foodservice portfolio and
reinforces our leadership in the UHT cream market.
One of our key focus areas is the mid-market in China –
the fastest-growing segment – driven by urbanisation,
a rising middle class and increasing awareness of
dairy’s nutritional value. Since launch, AEB has gained
strong traction. Made with 100% New Zealand dairy,
AEB offers strong functionality at a competitive price,
appealing to bakeries seeking full-dairy performance
while complementing our premium Anchor Whipping
Cream offering.
Strengthening our presence
As part of our strategic priority to invest in our local
application centres, we opened our sixth in-market
application centre in Wuhan, China in September
2024. This new facility strengthens our presence in
central China and enables faster development of dairy
applications tailored to local market trends. It joins
our existing centres in Beijing, Shanghai, Guangzhou,
Chengdu and Shenzhen, which play a vital role in
co-creating products that reflect regional tastes and
culture, while enhancing our national reach across
bakery, dining and beverage channels.
Continued Foodservice growth driving higher allocation
Full financial year figures
1,2
210
14.2%
15.6%
15.0%
15.0%
16.0%
232
million (kgMS)
Strategic targets
Excluding Mainland
0
30
20272026202520252024
Foodservice
The Greater China region remains the Co-op’s largest
foodservice market. In FY25, to meet growing demand, the
Co-op invested in new manufacturing capacity.
Construction at the $150 million UHT cream plant at
Edendale made steady progress, with the first product
expected off the line in August 2026. The investment is
set to unlock up to 20 million kgMS additional processing
capacity in the Foodservice portfolio, with potential to
increase capacity to more than double by 2030 if the
demand continues to grow, as we expand our Foodservice
business in and beyond China. The investment will help
grow value in Asia through high-margin, high-demand
dairy products with the plant producing Anchor Whipping
Cream, a favourite in China’s foodservice industry for its
superior stability and longevity. With over 260 million
cakes baked annually in China, demand for our UHT cream
product continues to grow, with UHT products among the
Co-op’s most profitable, with a projected 6% compound
annual growth rate over the next seven years.
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Emerging Foodservice products and markets
enabling growth in solids allocation
The Co-op is committed to leveraging the success it has
seen in the Greater China market to expand into new
markets. In North Asia, rising dairy consumption in Korea
– driven by dietary trends and a focus on healthy aging –
is creating new growth opportunities.
To respond to market needs, rising costs and the easing of
regional tariffs, in FY25 we developed Korean Lactic Butter, a
premium product with a more intense cultured taste, rivalling
European alternatives. Designed in collaboration with Korean
customers, the butter suits both raw consumption and
baking, appealing to bakeries that favour European-style
butters for their distinctive flavour. Manufactured at our
Te Rapa and Edgecumbe sites, the butter features a rich
flavour, vibrant yellow colour and excellent functionality.
Southeast Asia is emerging as a key region for foodservice,
with Vietnam showing rapid growth with sales of
foodservice creams nearly doubling in value between
2022 and 2024. Bakery, beverages and desserts are among
the fastest-growing foodservice channels in the region,
driving demand for Anchor Food Professionals’ products
such as butter sheets, cream and cream cheese.
Innovation remains central to driving Foodservice growth.
By developing new solutions, we can expand into new
markets and segments, reaching new customers and
driving product demand. An example is our mozzarella
cheese, where technology is tailored to meet customer
expectations on stretch, performance and price –
particularly important in our work with Global Quick
Service Restaurants (GQSR), where consistent product
performance and supply reliability are critical to meeting
the demands of high-volume, fast-paced operations.
Singapore
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Divestment of
Mainland Group
As at 31 July 2025, Mainland Group
(Consumer and associated businesses)
met the criteria to be classified as held
for sale and is now presented as a
discontinued operation
Mainland Group and other discontinued operations
operating profit is down $13 million to $172 million
1
due
to $106 million of Mainland divestment costs incurred in
the current period and recognition of a loss on disposal
of $66m relating to the disposal of DPA in the prior
comparable period.
Excluding these costs and other adjustments
2
to recognise
the financial performance of the Mainland Group on the
same basis as the reportable segments of the Group,
normalised discontinued operations operating profit of
$397 million is up $55 million on the prior comparable
period. This is due to Consumer having higher volumes and
better pricing, and the Australia business having a stable
milk price against higher global commodity prices.
In FY25, we progressed plans to
divest our global Consumer and
associated businesses. Following
a competitive process, the Board
determined that a sale to the world’s
largest dairy company, Lactalis,
represented the highest value option
for the Co-op, both immediately and
long-term. On 30 October 2025, we
will seek shareholder approval to
divest the businesses by ordinary
resolution at a Special Meeting.
Normalised discontinued operations operating profit
1
$397m
up 16.1%
1 Comparative information has been re-presented for consistency with the
current period.
2 Normalisations comprise of $106 million Mainland Group divestment costs
(2024: $(66) million loss on sale of DPA Brazil) and Inter-group transactions of
$119 million (2024: $91 million) reflecting trade terms for sales and purchases
between the Group and Mainland Group that are not expected to continue
following the divestment.
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Divestment process
During FY25, Fonterra conducted a dual-track divestment
process for its global Consumer and associated businesses.
This included exploring both a trade sale and initial public
offering (IPO) as potential divestment options.
Over a period of 15 months, the Board thoroughly
tested the terms and value of both a trade sale and IPO.
Following a highly competitive process with multiple
interested bidders, the Board determined that a sale
to Lactalis represented the highest value option for
the Co-op, both immediately and over the long term.
In August 2025, Fonterra announced an agreement to sell
the businesses to Lactalis for a total value of $4.22 billion.
This includes the base sale price of $3.845 billion, plus an
additional $375 million following the resolution of a dispute
with Bega Cheese Limited, resulting in the inclusion of the
Bega licences in the transaction.
Fonterra is targeting a tax-free capital return of $2.00 per
share to shareholders and unit holders, approximately
$3.2 billion, following completion of the sale.
What the sale includes
The divestment comprises the sale of shares in
Mainland Group Holdings Limited, a New Zealand
incorporated holding company owned by Fonterra.
The transaction includes:
–Fonterra’s global Consumer brands and business
(excluding Greater China)
–Integrated Foodservice and Ingredients businesses
in Oceania and Sri Lanka
–Middle East and Africa Foodservice business
–Bega licences held by Fonterra’s Australian business
As part of the agreement, Fonterra will continue to
supply raw milk, dairy ingredients and products to the
divested businesses under long-term supply agreements.
This means New Zealand farmers’ milk will continue to be
found in iconic brands such as Anchor and Mainland.
Regulatory and shareholder approvals
The sale is subject to several conditions:
–Approval by Fonterra shareholders
–Separation of the businesses from Fonterra
–Receipt of final regulatory approvals
Regulatory approvals are required from:
• Overseas Investment Office (New Zealand)
• Foreign Investment Review Board (Australia)
• Competition authorities in each of COMESA (the
Common Market for Eastern and Southern Africa),
French Polynesia, Kuwait, Vietnam, the Kingdom of
Saudi Arabia and New Caledonia
In July 2025, the Australian Competition & Consumer
Commission confirmed it would not oppose the proposed
acquisition by Lactalis in Australia.
Shareholder vote and capital return
The Co-op will seek shareholder approval to divest the
businesses by ordinary resolution at a Special Meeting
scheduled for 30 October 2025.
Following completion of the sale and receipt of proceeds
in New Zealand, a separate shareholder vote will be held
to approve the capital return. The final amount will be
confirmed ahead of this vote.
Subject to shareholder approval, separation of the businesses,
and regulatory conditions being met, the sale is expected
to be completed in the first half of calendar year 2026.
Kiri & Te Kaihou, Bay of Plenty
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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.
Cash operating expenses per kgMS
$1.40 per kgMS
up from $1.36 per kgMS
Manufacturing costs per kgMS
$2.67 per kgMS
up from $2.58 per kgMS
Rama & Frances, Waitoa
Flexible and efficient asset capability gives
Fonterra the ability to gear certain plants
towards higher-value Ingredients and
Foodservice products.
We increased our growth capital spend in FY25 by
$111 million as we focused on building capabilities on
site to unlock capacity, with investments into Studholme
and Edendale to increase solids allocation to higher value
Ingredients and Foodservice products.
Alongside these new growth projects, we also closed our
Hamilton-based Canpac site in July. The facility packaged
around 4,000 metric tonnes of milk powder annually – less
than 1% of the Co-op’s total product volume.
Our pipeline of future growth investments is strong,
with upcoming investments to grow value in our
existing protein, butter and cream cheese portfolios
and investments in site operations.
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The Co-op remains focused on maintaining its
manufacturing asset base, with essential capital
spend up $77 million to $635 million comprised of:
–$104 million in managing energy security risk and
decarbonisation initiatives
–$71 million on upgrades to our wastewater assets to
improve our environmental footprint, and enable our
license to operate
–$317 million in New Zealand operations to support
safe people, safe food, and improved asset reliability
across our asset networks.
Kev & Beau, Waitoa
Energy security in manufacturing
Taking further steps in renewable energy, we are
advancing our sustainability targets while future-
proofing energy security in operations through
significant investment in electrification. In January
2025, we announced a $150 million investment over
the next 18 months to enable electrification across our
North Island operations, supporting energy security
and reducing fossil fuel reliance. This includes electric
boilers at Whareroa, Edgecumbe and Waitoa, plus an
EV tanker fleet pilot. At Whareroa, $64 million will fund
two electrode boilers, expected to cut annual emissions
by 51,000 tonnes. Edgecumbe will install an electrode
boiler and a resistive element boiler, expected to cut
annual emissions by 26,000 tonnes. Waitoa and Waitoa
UHT will invest $18 million in two Resistive Element
Boilers, following the retirement of the last coal boiler
in November 2024, boosting the site’s process heat
capacity and energy reliability. Based in the Waikato,
the EV milk tanker pilot – designed to assess EV
performance, infrastructure and cost efficiency – will
introduce six electric tankers to the fleet with the first
of the tankers due to hit the road in December 2025,
with full rollout of all six tankers by June 2026. Charging
infrastructure installation is currently underway
at Te Rapa, Waitoa, and Hautapu and is due to be
commissioned by November 2025.
Investment carries on across the South Island, with the
new Edendale electrode boiler being commissioned
in October 2024, along with the announcement of
a further $70 million for two additional electrode
boilers at the site to support growing energy needs.
At Clandeboye, the two converted wood pellet boilers
also fired up this month, providing the site with secure,
renewable energy.
2027202620252024202320222021
Strategic targets
466
79
534
53
621
47
558
56
635
167
63
30
79
106
128
608
617
747
720
930
1,000
980
Growth capital expenditure
Other capital invested
Essential capital expenditure
Capital invested ($ million)
Full financial year figures
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Alina, Edendale
In addition to our capital spend, we are investing heavily in
upgrading the Co-op’s new ERP system to make it fit for
purpose and improve operational efficiencies.
The Co-op is enhancing its Core Operations through the
‘Operations for the Future’ which focuses on unlocking
greater value across our network. By leveraging
automation, disciplined cost management, and targeted
investment, we are optimising performance and
throughput to support long-term growth, resilience
and safety and quality outcomes.
The Co-op has made important progress in safety,
launching a new framework designed to embed a proactive
safety culture across our operations. Key FY25 initiatives
included the ammonia removal project at Whareroa which
was recognised at the 2025 New Zealand Workplace
Health and Safety Awards. Similarly, we introduced our
e-Permit to Work system across sites, embedding digital
tools that streamline permit and safety checks. These new
initiatives and efforts have reduced risk, with serious harm
events falling to six in FY25 – down from 18 in FY23 and
16 in FY24.
Productivity continues to be a key focus, incorporated
across every level of the business through a combination
of digital innovation, operational systems, process
optimisation and the commitment of our people. AI-
enabled technology now inspects all 80+ million 25kg
milk powder bags filled annually across 56 packing lines,
automatically rejecting damaged bags and providing
timestamped traceability. At Clandeboye, similar
technology monitors bulk butter packaging – reducing
waste and downtime while maintaining quality. Automated
Guided Vehicles manage pallet movement, with the
majority of the packing process automated.
The Co-op remains focused on being an industry leader
in quality.
Our new Food Safety, Quality and Regulatory (FSQR)
strategic plan launched in late FY25 reinforcing our
commitment to making product right first time, every time.
Over the next four years, the plan aims to build consumer
trust and protect product value, enabling our business to
remain resilient and future-ready.
In FY25, cost of quality increased from $92 million to
$99 million, mainly due to manufacturing performance.
Despite this increase, our “right first time” production
metric remained relatively stable at 95.7%, compared to
95.8% in FY24. This stability reflects the challenges and
variability observed in key product categories, including
Whole Milk Powder, Butter, and Cheese manufacturing
processes. This year, the Co-op achieved its highest milk
volumes since the 2021/22 season and a record milk price
of $10.16. The cost of quality outcome achieved represents
a balance between maintaining operational efficiency,
applying robust risk management practices, and optimising
financial performance.
As the operating environment becomes increasingly
dynamic – shaped by shifting consumer expectations,
more stringent regulatory standards, rapid technological
advancements, and growing demand for nutritionally
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On-farm
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Process optimisation driving results at Darfield
Operational systems and teamwork are delivering
powerful results. Our team at Darfield combined
process optimisation with new technologies to
lift annual cream cheese capacity from 24,000 to
30,000 tonnes, contributing to a record season.
The site now produces over 270,000 tonnes of
cream cheese and milk powder annually, while
maintaining excellent quality standards. Edgecumbe
also achieved a record season, producing over 9,000
tonnes of butter sheets for Foodservice customers,
pushing efficiency even further.
Strategic targets
202720262025202420232022
Cash opex per kgMS
1.17
1.30
1.36
1.40
1.12
1.05
2.30
2.62
2.58
2.67
2.62
2.64
Manufacturing cost per kgMS
Cash expenses ($/kgMS)
Full financial year figures
functional dairy products – we remain committed to
driving continuous improvement. To this end, we have
implemented a focused plan aimed at embedding greater
stability, reliability, and consistency across all stages of
production. This proactive approach supports both our
immediate priorities and our long-term sustainability goals,
ensuring we continue to deliver high-quality dairy products
in a responsible and efficient manner.
The FY25 cash operating expenses per kgMS of $1.40
includes 8 cents related to the investment in the Co-op’s
ERP system. The spend is expected to peak over FY25
and FY26 with the investment unifying essential business
operations including sales, logistics and invoicing, into a
single, integrated platform to deliver greater productivity
and efficient decision-making. The rollout begins in
November, starting with our Morrinsville and Maungaturoto
sites in New Zealand, and the Chicago office in the United
States, with wider deployment planned over the following
two years.
The FY25 manufacturing costs per kgMS increased 9 cents
to $2.67 due to inflationary pressures, one-off staff costs
and incremental costs relating to a move towards a more
valuable product mix, as our portfolio shifted towards
higher margin Ingredients and Foodservice products.
This increase was partially offset by higher milk solids
collected and efficiency gains.
Delivery in Full on Time (DIFOT) performance has returned
to pre-COVID levels, with our best result since 2020 of
81.5% at departure, despite ongoing global disruptions
including geopolitical tensions in the Middle East, delays
through the Panama Canal, and industrial action at
key ports. Achieving this level of reliability under these
conditions reflects our Co-op’s significant operational
resilience and coordination across our supply chain.
Fonterra Whareroa
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Build on our
sustainability
position
Bridgeman Family, Taranaki
In FY25, the Co-op continued its
long-standing focus on sustainability
– encompassing climate change, water
stewardship, animal wellbeing and long-
term value creation – while progressing
its energy transition through reduced
fossil fuel use and targeted investment
in renewables, balancing energy security,
capital priorities and operational needs.
Fonterra has a target to reduce on-farm emissions
intensity from dairy by 30% by FY30, from a FY18 base
year. Announced in 2023 as part of the Climate Roadmap,
this target supports the Co-op’s broader 2030
targets and aspiration to be net zero by 2050.
In addition to the on-farm target, the Co-op has a
target to reduce absolute Scope 1 and 2 emissions
by 50.4% by FY30, also from a FY18 base year.
In FY25
1
we achieved:
–A 3.8% reduction in Scope 1 and 3 Forest, Land and
Agriculture (FLAG) GHG emissions from dairy per tonne
of fat-and-protein-corrected milk from a FY18 base year,
against an intensity target of 30% reduction by FY30.
–A 20.7% reduction in absolute Scope 1 and 2 GHG
emissions from a FY18 base year, against an absolute
target of 50.4% reduction by FY30.
Further improve our sustainability
credentials as we work towards our
ambition to be net zero by 2050.
1 The percentage indicates the reduction achieved between the base year and
the end of FY25.
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Our targets are critical to maintaining competitiveness,
strengthening customer partnerships, meeting market
access requirements, and complying with evolving
legal and reporting obligations – enabling the Co-op
to play its part in addressing climate change.
On-farm
We support farmers in taking meaningful action to reduce
on-farm emissions through a range of targeted initiatives.
Now in its fifth year, the annual Farm Insights Report offers a
personalised overview of each farm’s performance. Drawing
on Farm Dairy Records, milk quality and production data and
broader industry insights, the report helps farmers make
informed decisions that aim to improve efficiency.
Our Farm Source teams provide practical, expert support
across milk production, herd health, environmental
sustainability, compliance and digital tools. This includes
Farm Environment Plans designed to address soil health,
water quality and freshwater biodiversity. These plans use
mapping technology and recommend actions to mitigate
on-farm risks.
We continue to deliver sustainability programmes through
a combination of customer-funded pilots and Co-op-led
initiatives. Nestlé funded a pilot programme announced in
November 2022, supporting on-farm efficiency visits, while
Mars backed a separate tools and services pilot focused
on driving efficiency during the 2024/25 season. This has
now been extended to incorporate funding from Mars
and Nestlé into broader on-farm solutions as part of their
customer incentives designed to drive efficiency and/or
emissions reductions. Independently of customer funding,
the Co-op scaled up our efforts in the 2024/25 season,
enabling efficiency visits to be delivered at scale across
New Zealand farms.
We have also entered into an initiative with Mars and Nestlé
to test the scalability of a mobile effluent pond dosing
service. Signed in February 2025, the pilot will run from 2025-
2027. Statistics from EcoPond have shown the potential to
reduce pond methane emissions by at least 90%.
In FY25, we made steady progress in the uptake of
New Zealand farms adopting an Animal Wellbeing Plan
with the number increasing year-on-year. We also met our
target of 100% of New Zealand farmers now having a Farm
Environment Plan.
Mila & Mike, Taranaki
NZ milk-supplying farms with an Animal Wellbeing Plan
53%
76%
85%
90%
92%
FY25FY24FY23FY22FY21
Milk-supplying farms with a Farm Environment Plan
53%
71%
13%
85%
31%
93%
50%
100%
58%
New ZealandAustralia
FY25FY24FY23FY22FY21
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Moving to renewable energy solutions
We continue to refine our fossil fuel transition plans,
as we work toward long-term energy sustainability.
A key milestone was reached in November 2024
when we eliminated coal use across all North Island
manufacturing sites, switching off the final coal boiler
at Waitoa. In the South Island, we have reduced our coal
use at both Edendale and Stirling, and our focus remains
on transitioning all remaining sites in the South Island
off coal. Across our South Island sites, 13 coal boilers
remain. With the latest announced investments in two
new electrode boilers at Edendale and the conversion
of two coal boilers to wood pellets at Clandeboye, once
these are operational, the number of coal boilers will
drop to nine across five sites. These site-level changes
reflect a broader shift toward renewable energy.
In May 2025, we celebrated our first electrode boiler at
Edendale, officially opened by the Minister for Climate
Change and Energy, Simon Watts, alongside our Chief
Operating Officer, Anna Palairet. At the same time,
we announced a further $70 million investment in two
additional electrode boilers at the site. Co-funded
through our partnership with the Energy Efficiency
and Conservation Authority (EECA), these boilers will
replace coal-fired boilers and support growing energy
needs for milk processing and future growth, including
steam and power for the new UHT plant currently under
construction. Once operational, they are expected
to reduce site Greenhouse gas (GHG) emissions by
approximately 72,800 tonnes annually and contribute
an estimated 4% towards the total Co-op’s 2030 Scope
1 and 2 emissions reduction target. Construction of the
two new electrode boilers is underway, with completion
expected by August 2027.
Additional projects undertaken this year include installing
two resistive element boilers at Waitoa to meet process
heat needs and support increased UHT production. At
Whareroa and Edgecumbe, two electrode boilers and one
resistive element boiler will be installed, enabling these
sites to transition away from co-generation steam and
electricity supplied by natural gas.
We also won the ‘Large Energy Users Initiative of the Year’
category at the New Zealand Energy Excellence Awards for
our Waitoa biomass project, following the first season the
boiler was operational in FY24.
Sustainable value
Sustainability continues to be a key driver in strengthening
relationships with major customers and delivering value
to farmers.
In the 2024/25 season, Nestlé continued its support of
sustainable farming for a second season by funding an
additional payment of 1–2 cents per kilogram of milk solids
to farmers who achieve any level of the Co-operative
Difference framework. This contribution recognises on-farm
progress across sustainability, quality and animal wellbeing.
In February 2025, we introduced new funding initiatives
to build a stronger Co-op and enhance shareholder value
by supporting farmers in reducing on-farm emissions.
Beginning in the 2025/26 season, farms that meet specific
emissions-related criteria will receive payments through
updates to the Co-operative Difference framework,
including the new Emissions Excellence achievement.
The Net Zero Pilot Dairy Farm in Taranaki, a partnership
between Fonterra and Nestlé, and run with Dairy Trust
Taranaki, has completed its third season with the pilot
aiming to establish New Zealand’s first commercially viable
net zero dairy farm within ten years.
In June 2025, the New Zealand Grass-Fed Administrative
Standard was launched by the Ministry for Primary
Industries. This standard defines the criteria for animals to
be considered grass-fed in New Zealand. Our farmers are
already exceeding the requirements with data showing
that on average their cows are 96%
1
grass-fed and spend
a minimum of 350 days on pasture. The Standard adds an
extra layer of trust in our sustainability credentials.
Across Asia, demand for our natural, grass-fed dairy
continues to grow, driven by New Zealand’s reputation for
premium quality and a unique grass-fed proposition that
stands out in North Asia and Greater China.
Andrew & Michael, Edendale
1 The average is measured over the previous three seasons’ data, considers
freshweight of grass feed and is subject to minor variations.
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Water
At our manufacturing sites, we have made progress toward
our water targets, with water security playing a crucial
role in protecting New Zealand’s natural resources and
supporting the long-term sustainability of our operations.
In FY25, we drew close to achieving our 2030 target of a
15% reduction in water take based on a FY18 baseline.
This milestone was driven by several initiatives across the
Co-op over FY24 and FY25:
–In FY24 we completed the rollout of Water Improvement
Plans across global sites.
–At our Edendale site, we introduced a project to recover
evaporator condensate which reduces the need to
withdraw about 643,000m
3
of fresh water each year from
an underground aquifer.
–In FY25 our Te Rapa site reduced water demand by
approximately 1,300,000m
3
, due in part to some older
processing systems ceasing operations.
When combined, these projects delivered substantial water
savings alongside ongoing continuous improvements
delivered at a site level.
Building on these efforts, we began commissioning
Hautapu’s new $120 million wastewater treatment plant in
mid-2025, with the plant expected to be fully operational
by July 2026. The facility separates wastewater into
treatment zones where microorganisms break down
organic matter to reduce nitrogen and phosphorus levels.
At our Longburn site, the Co-op worked with the local
council, landowners, iwi and other stakeholders to
implement a water discharge solution that irrigates treated
wastewater to land, only discharging to the local municipal
system when irrigation is not practical. This approach
removed the need for river discharge and avoided the
construction of a new wastewater facility.
Our largest decarbonisation project to date
At Clandeboye, preparations are progressing for one
of our largest decarbonisation investments to date
– a multi-million dollar project to convert two coal
boilers to renewable wood pellets. The conversion
was completed earlier this month, providing the
site with secure, renewable energy and will reduce
site emissions by approximately 150,000 tonnes
of CO
2
e each year. By creating consistent demand
for wood pellets, the investment helps build
supply chains across New Zealand, enabling future
decarbonisation at other coal-using sites, including
Darfield, Studholme, Tākaka and Edendale.
Fonterra Hautapu
Reduction in water take across manufacturing sites
FY25FY24FY23FY22FY21
-5.8%
-9.4%
-6.7%
-12.4%
-14.7%
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Doing Good Together
In 2025 we served
over 8 million
KickStart Breakfasts
in more than
1,500 schools and
donated over 14
million dairy serves
to communities
across Aotearoa
New Zealand.
We launched a
partnership with
Landcare Trust to
distribute $750,000
to community
wetland projects
over the next three
years. This year
we confirmed nine
projects to provide
funding.
We donated
over $1 million to
community projects
in New Zealand and
nearly $550,000
across global
markets.
We extended our
partnership with the
Rural Support Trust
for another three
years and supported
a report by the Ākina
Foundation, showing
that for every $1
invested into Rural
Support Trust
services, a social
value of $4.60 -
$5.50 is returned to
rural communities.
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Innovate to
drive our
advantage
James, Palmerston North
Innovation continues to be a key driver
of value for the Co-op, with a focus on
unlocking new opportunities across our
value chain.
To maximise value from every drop of milk, we are
focused on:
–Investing in R&D and partnering with customers to
develop core dairy products and science-backed
nutritional solutions
–Implementing on-farm emissions reduction solutions
and manufacturing process improvements
–Collaborating through in-market application centres and
R&D partnerships
–Investing in new businesses and technology through the
Ki Tua Fund.
These efforts are well-aligned with global advances in food
technology, which are opening new pathways for dairy.
Our approach to innovation is designed to respond
to evolving market needs to capture value growth
opportunities for the Co-op.
One of the ways we’re harnessing this potential is through
the Ki Tua Fund, the Co-op’s corporate venture capital unit
launched in June 2023. The Fund invests in, partners, and
works with founders and start-ups across agritech, value
chain, and food and health technology to accelerate and
scale new solutions. Since inception, the Fund has made 10
investments. Designed to diversify earnings and build new
capabilities, the Fund supports ventures that complement
and enhance our core business.
In FY25 it invested approximately $3 million into BioLumic,
a Palmerston North-based start-up pioneering ways
to enhance pasture productivity.
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To support growth in our Foodservice and Ingredients
businesses, a key innovation focus area is our Next-Gen
Dairy Solutions focus area. This targets the product
categories that drive the Co-op’s volume and value –
such as UHT cream, cream cheese, anhydrous milk fat
and processed mozzarella. Our focus spans both full and
blended dairy solutions, with the latter enabling us to bring
the best of dairy and non-dairy together to make our solids
go further or drive different functionality. This includes
high-performance milk fats and cream, cheese formats
tailored to emerging markets, accessible dairy options, and
ambient formats for longer shelf life and flexibility.
A standout example of our innovation is Anchor Easy
Bakery Cream. With global demand for UHT cream
expected to grow by over 6% annually between 2023
and 2032, we saw an opportunity to enhance an existing
formulation. By making targeted adjustments to improve
functionality and introducing batching efficiencies to
reduce production costs, we developed a product that
delivers full dairy performance at a competitive price.
From concept to market readiness in just seven months,
the launch showcases our agility and commitment to
delivering smart, customer-focused solutions.
Another example is the development of next generation
Frozen Whole Milk Concentrate (FWMC), created to meet
rising demand for premium fresh dairy in markets like
Taiwan, China and Southeast Asia. A fresh milk alternative
created by concentrating and quick-freezing milk, FWMC
utilises breakthrough technology proprietary to the Co-op.
It delivers five times the concentration of milk solids and
maintains flavour and reduces production costs while
performing well in applications such as freshly prepared
lattes and cultured applications. Commercialisation
funding is yet to be allocated, as we continue to assess
market readiness. We’re also exploring a broader range of
frozen ingredients.
Using AI to unlock nearly a century
of knowledge
In December, Fonterra launched Dairy Detective, a
generative AI platform developed with Microsoft
New Zealand to unlock nearly 98 years of in-
house research. Powered by the vast knowledge
base of the Fonterra Research and Development
Centre, the tool provides secure, instant access
to over 19,000 documents from the DairySearch
knowledge bank (a giant digital library), helping
researchers locate data, summarise findings and
explore related materials quickly, enabling faster
progress across innovation-focused projects.
Estimated to deliver savings of 8,000 research
hours annually, it reduces time spent on literature
search, helping accelerate developments that
benefit farmers and the wider dairy industry.
We see innovation as more than just creating new products
– it’s about improving how we operate across our entire
business. As we tackle both current and future challenges,
we’re also identifying new opportunities to strengthen
performance and deliver value. A key focus is making
our operations more efficient while meeting growing
stakeholder expectations, maintaining our leadership in
sustainability, and accelerating the digitisation of how we
work. Our efforts are centred on three core areas:
–Enhancing value through digital tools that improve
decision-making and responsiveness across the
supply chain.
–Improving manufacturing efficiency and decarbonisation,
ensuring our processes are leaner, more sustainable and
future ready.
–Supporting practical solutions on-farm that help
our farmer shareholders operate more efficiently
and sustainably.
This integrated approach to innovation supports our
delivery of high-quality products while building a more
resilient, agile and responsible Co-op.
We are using artificial intelligence to reduce packaging
fault downtime, that can increase costs and impact
food quality, along with customer satisfaction. We have
developed and deployed a solution leveraging computer
vision to analyse the packaging of our powder bags and
butter products along the production line, and in real-
time identify packaging faults, pause the packaging
line, and alert operators to rectify the issue. In FY25
further improvements for the system were implemented.
Deployed at our Clandeboye site, the technology has
already reduced butter packaging fault downtime in FY25
by over 90% with the rollout continuing to other butter
plants, starting with Whareroa and Te Awamutu.
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Another breakthrough in FY25 came in our high-solids
drying processes, marking a major step in improving
manufacturing efficiency. By increasing the concentration
of milk fed into our dryers, we can reduce energy use per
metric ton, lower greenhouse gas emissions and boost
plant capacity. Improved understanding of evaporation,
atomisation, and drying processes has led to promising
early results, including potential energy savings of up to
10% and increased throughput at key powder sites. Trials
at Darfield are underway to confirm production stability,
product outcomes and throughput gains, with potential
applications across other powder-based products,
including protein powders.
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Sustainability
Reporting
Harriet & Mila, Taranaki
In this section
Our Approach44
Material Topics52
Data Consolidation78
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Our Approach
Fonterra’s commitment and approach to
sustainability is embedded in our strategy,
policies and targets, highlighting the
importance of sustainability as a key
priority for creating long-term value for
our stakeholders and future generations.
Our Sustainability Global Policy underscores our strategic
choice to build on our sustainability position. It is founded
on the principles of manaakitanga (respect for others)
and kaitiakitanga (care for the environment), which
shape our responsibilities towards people, the planet
and economic performance. This is supported by our
sustainability standards, which define the requirement
to embed sustainability into the way the Co-op operates,
and to align with global best practice, such as the United
Nations Sustainable Development Goals (SDGs).
As a global food producer, we recognise the importance of
addressing long-term challenges and transitional changes.
This requires forward-thinking, effectively managing
risks and identifying opportunities to deliver sustainable
outcomes. Through whanaungatanga (collaboration and
connection), we strive to contribute to a healthier planet
and better lifestyles for people around the world.
Our approach is informed by internationally recognised
ethical standards and sustainability frameworks to
promote continuous improvement across our operations.
Ethical business
Fonterra drives ethical and responsible practices
across our global operations and business relationships
through a comprehensive suite of policies, standards
and supporting documents. This policy framework is
essential to the Co-op’s risk management and supports
our performance. Our policies and standards are available
for our people to easily access through an internal on-line
library, with references and opportunities for how and
where additional advice can be sought.
Our Ethical Behaviour Global Policy outlines our commitment
to conducting business with integrity, meeting legislative,
regulatory and contractual obligations, and upholding
the highest standards of professionalism. It promotes
robust and transparent business practices, including
managing conflicts of interest and reporting fraudulent
or unlawful activity.
The Legal and Compliance Global Policy reinforces the
expectation that all business units assign clear roles and
responsibilities for compliance with all applicable laws and
regulations. This expectation and our actions to embed a
culture of compliance across our operations is supported
by monitoring, assurance, reporting and continuous
improvement processes. The policy was last updated
in May 2025 and is underpinned by our legal, compliance
management, anti-money laundering, samples and
customs standards.
This section of the report provides stakeholders
with an overview of our policies, targets and
actions taken to support our sustainable
performance during our FY25 financial year,
1 August 2024 to 31 July 2025.
It is the second year that sustainability reporting
has been integrated into the Annual Report,
which reflects the alignment of Fonterra’s
governance and strategic choice to build on
our sustainability position.
Annual sustainability reporting is part of our
commitment to transparency and sharing our
progress and performance openly. It continues
the journey we began with our first public
sustainability report in 2017.
We value the perspectives of our stakeholders.
To provide comments on this report, please email
us at sustainability@fonterra.com
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These commitments are brought-to-life for our people
across the world in The Way We Work – our Code of
Business Conduct. This code was most recently updated
in 2024. It reflects our purpose and values and outlines
behaviours expected of our people towards each other,
our customers, the wider community, and the expectation
of our suppliers and business partners to uphold our
principles and standards. All new employees are provided
with a copy as part of their on-boarding process, and it is
made available in multiple languages to all our employees
and stakeholders globally.
Together our Code of Business Conduct and our
policies and standards create the framework for the
Co-op to operate with integrity, to meet legal and
regulatory requirements and to foster open and honest
communication. The Way We Work Hotline provides an
independently managed vehicle for our people, supplying
farmers, business partners and others to speak up. All
concerns raised are addressed seriously and sensitively.
Our Supplier Sustainability Code of Practice extends
our commitments to ethical business and social and
environmental responsibility to our suppliers across
our value chain. This year, we focused on embedding
this code more deeply into our Third-Party Risk
Management system to support our consistent
assessment and management of vendors.
All global policies are approved by the Board, and
responsibility for implementation cascades from the
appropriate Fonterra Management Team (FMT) member(s)
to the relevant business units across the Co-op.
Our publicly available policies and updated version of
The Way We Work, can be found on fonterra.com.
Training on our policy framework
Annual training on our global framework of policies,
standards and supporting documents underscores our
expectation that our people understand and apply our
policies to their decision-making and daily activities.
Our annual policy commitments and conflict of interest
declaration e-learning campaign is a good way for our
teams to stay updated with these essential global policies
and fulfil the requirement for senior leaders to make an
annual conflict of interest declaration.
This campaign is a requirement for all people managers,
employees with ‘manager’ in their title, employees
from levels one to five in the Co-op’s organisational
structure, and level six and below employees who work in
sensitive business areas or functions. These areas include
Procurement, Sales, Communications, Internal Audit,
Finance, Environmental, areas managing or influencing
a budget with an external third party and areas with
access to information that could influence our share
price or reputation.
This year, more than 99% of those assigned this e-learning
campaign completed it successfully.
Legal compliance
In addition to providing training, we seek to protect
Fonterra’s reputation by implementing robust practices
in the areas of actual and potential conflicts of interest,
bribery and corruption, gifts and corporate hospitality,
and the disclosure of fraudulent and unlawful activity.
Our Ethical Behaviour Global People and Culture Standard
provides more detail on our requirement for everyone
who works at the Co-op to behave ethically with honesty
and integrity in all aspects of their work. This personal
conduct includes following all relevant legal and regulatory
requirements, acting in the best interest of the Co-op
rather than for personal gain and speaking up about any
potentially unethical behaviour.
Over the past year we have not identified any material
incidents of non-compliance with laws and regulations
in the social and economic area
1
. We did not receive
any abatement notices for non-compliances with
environmental regulations.
There were also no legal actions, fines or non-financial
sanctions related to anti-competitive behaviour, anti-trust
and monopoly practices over this period.
Barnes Farm, Southland
1 Fonterra determines significance by evaluating factors such as legal implications,
scale, any ongoing impacts and financial impacts.
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Each year our group-wide Internal Audit team assesses
all Fonterra businesses for potential fraud risk. This
risk assessment helps prioritise audits across our
global operations.
During FY25, 61% of the internal audits completed
globally included either a direct or indirect assessment
of corruption-related risks. Key focus areas included
the segregation of duties, delegated authorities and
procurement practices. As part of these audits, one
manufacturing site under our management control
was subject to an anti-corruption check.
The Internal Audit team was referred to investigate ten
potential cases of corruption or fraud identified through
our whistle-blowing hotline in FY25. Six claims were not
substantiated, one was partially substantiated and three
investigations are ongoing. The results and outcomes of
the investigations are reported to the Audit, Finance and
Risk Committee of the Board.
Building relationships and engaging with stakeholders
Listening to the views and perspectives of our stakeholders
and fostering strong relationships are vital to the long-term
success of our Co-op.
We are committed to operating in a manner that builds
trust and enduring partnerships by acting with honesty,
integrity and transparency. Open and ongoing dialogue
with key stakeholders helps us better understand and
address our impact on people, the planet and communities
we serve.
Our stakeholders are those individuals or entities that are
significantly impacted by our products and the activities
required to source, manufacture and distribute them, or
whose actions influence our ability to deliver our strategy.
They include farmer shareholders, unit holders, debt
investors, joint venture partners, employees, customers,
the communities where we operate, governments, NGOs,
suppliers and industry groups.
We aim to engage in ways that reflect our values: working
collaboratively because we are good together, embracing
transformation to be better every day, and focusing on
performance because every drop counts.
To recognise that our stakeholders are diverse and
have varying expectations, our engagement is based
on structured mechanisms and informal interactions
across a range of topics. This includes engaging with
stakeholders through industry collaborations, partnerships
and initiatives that align with our sustainability goals.
Through these interactions we share knowledge, learn from
others and seek to collectively address challenges facing
the dairy industry and broader agriculture sector.
Adam & Matt, Taranaki
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1 https://saiplatform.org/
Memberships in industry associations and other organisations
Fonterra actively collaborates with several dairy industry
associations and other membership organisations within
New Zealand and internationally. These memberships
and initiatives reflect our commitment to advancing
sustainability, innovation and best practices across
the industry.
As an active member of the Sustainable Agriculture
Initiative Platform
1
, the Co-op is piloting its
Regenerating Together framework to support the
development of a globally recognised, industry-aligned
approach to demonstrating regenerative agriculture
on farms. We have aligned our regenerative agriculture
position with this framework and are committed to
contributing to its ongoing development. Through this
pilot, we are testing the framework’s practical application,
collaborating with industry peers and bringing a
unique New Zealand pasture-based perspective to the
global conversation.
Another example is through our membership of the
Sustainable Business Council in New Zealand, where
we participate in several Communities of Practice.
These communities are across key sustainability issues
from climate transition planning to nature positive
working groups. They bring together like-minded
organisations to provide tools, information, support
and connections to learn more and deliver on our
sustainability work programmes.
Below are some of the voluntary memberships and
initiatives we supported this year.
MEMBERSHIPSINITIATIVES
–Bioenergy Association of
New Zealand
–Australian Packaging
Covenant
–Business New Zealand and
the Sustainable Business
Council
–Dairy Sustainability
Framework
–Dairy Women’s Network –New Zealand Climate
Leaders Coalition
–Global Dairy Platform –Science Based Targets
initiative (SBTi)
–International Dairy
Federation
–Safer Farms
–Roundtable for Sustainable
Palm Oil
–Sustainable Agriculture
Initiative Platform
–Sustainable Dairy
Partnership
–The Aotearoa Circle
–U.S. Dairy Sustainability
Alliance
Additional examples of stakeholder engagement are
provided in the other sections of this report, such as
shareholder rights and relations, and on fonterra.com.
Responsible political behaviour
Fonterra does not make corporate contributions of any
kind to a candidate or political party in connection with
political elections. No corporate political contributions
were made by Fonterra in the past year. Fonterra does
not and does not allow its employees to offer money or
anything of material value to government officials, parties
or candidates for the purpose of influencing the acts or
decisions of officials. This expectation is communicated
to all staff through The Way We Work and as part of our
annual training programmes.
In September 2024 the
Co-op was awarded a gold
medal by EcoVadis ESG
rating platform, placing us
in the top 5% of companies
assessed over the previous
12 months. This achievement
demonstrates our continuous
improvement across the
topics of environment, labour
and human rights, ethics and
sustainable procurement.
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To promote impartiality and open dialogue an external
consultancy facilitated the workshops and conducted
interviews with external stakeholders and experts.
These stakeholders included representatives of
customers, farmer shareholders, local, regional and
national government, iwi (tribal authorities), NGOs
and universities.
We assessed the significance of our impact by evaluating
the potential and actual positive and negative effects of
our activities on the economy, environment and people,
including human rights across the Co-op’s activities and
business relationships. This evaluation was based on the
criteria of the scale of our impact (severity), scope of our
impact, irremediability, and the likelihood of the impact
occurrence. While mitigating activities were acknowledged
as reducing negative impacts; they were not classified as
positive impacts. For topics with both positive and negative
impacts, the primary impact was prioritised.
This materiality assessment process was led by Fonterra’s
sustainability team, which brought experience in
sustainability, materiality assessments, the dairy industry
and product manufacturing. We also engaged an external
sustainability consultancy with expertise in conducting
materiality assessments to align with GRI requirements.
The findings were reviewed and adopted by our executive
leadership – the Fonterra Management Team – and the
Sustainability and Innovation Committee of the Board.
Responding to what matters most
– our material issues
Understanding our Co-op’s impacts is essential to guiding
our sustainability journey and focusing on the issues that
matter the most.
In 2024 we refreshed our materiality assessment of the
issues that shape our sustainability agenda and help us
to prioritise our actions. This updated assessment forms
the foundation of this sustainability reporting, aligning
with the Global Reporting Initiative (GRI).
Building on insights from our 2021 assessment, we
identified potential impacts across our value chain using
industry guidance and reports, including the Agriculture,
Aquaculture and Fishing Sectors guidance from the Global
Reporting Initiative (GRI 13), the European Sustainability
Reporting Standards and the Dairy Sustainability
Framework (DSF)
1
. As a founding member of the DSF we
are committed to addressing all 11 DSF criteria within our
supply chain with a focus on continuous improvement and
informed by the findings of our materiality assessment.
Our comprehensive approach to materiality assessment
incorporated insights from various other sources,
including customer and consumer insights, research
reports, risk assessments, media coverage and
stakeholder engagement.
We then prioritised six impact areas for deeper exploration
and engagement through internal workshops and
stakeholder interviews: on-farm, people and employment,
customer and consumer, Māori engagement, packaging
and nature.
Define
List of material impacts reflecting
the Co-op’s sustainability
context identified
Prioritise
Assess and prioritise the
list of material impacts for
stakeholder engagement
Engage
Determine the experts and
stakeholders to be consulted
Assess
and validate
Engagement findings and
additional insights inform
the assessment
Finalise
Confirm prioritised impacts and
consolidate as a list of material
topics for review and agreement
by the Co-op’s leadership team
and Board
Report
Refreshed material topics form
the basis of external reporting and
sharing of results and actions
Our materiality process
1 For more information see www.dairysustainabilityframework.org and
www.saiplatform.org/sdp/
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Updates on previous materiality assessments
The 2024 materiality assessment adopted the new GRI
impact approach by identifying and prioritising impacts
to determine the most material topics for the Co-op.
This differs from previous assessments, which evaluated
the topics based on stakeholder perspectives alongside
the significance of impacts.
While this reporting is centred on topics rated significant
in our 2024 materiality assessment, four topics identified
in our 2021 assessment as of medium importance are no
longer a specific focus of this reporting. These topics are
employment rights, ethical business practices, responsible
procurement and post-consumption waste. Some
information on these topics is included for consistency and
completeness. Additionally, the topics of economic impact
and employment, and sustainable packaging were added to
our 2024 list of significant material topics.
The material topics guiding our reporting this year are
consistent with our 2024 material topics.
Laura, Southland
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MATERIAL TOPICDESCRIPTION OF FONTERRA’S KEY IMPACTSRELEVANT GRI 13 & TOPIC STANDARDS
LINKS TO THE UNITED NATIONS
SUSTAINABLE DEVELOPMENT GOALS
Climate
The generation of GHG emissions from farming, manufacturing and
distribution contributes to a changing climate and its associated impacts.
Topic 13.1 Emissions (GRI 305)
Topic 13.2 Climate adaptation and resilience (GRI 201)
Biodiversity
and land
Biodiversity loss, poor soil health and reduced ecosystem and community
resilience caused by dairy farming, sourcing of raw materials and Fonterra’s
operational activities.
Topic 13.3 Biodiversity (GRI 304)
Topic 13.4 Natural ecosystem conversion
Water
Impacts to the health of freshwater and marine systems from farm run-off and
wastewater discharge. Potential water availability impacts where the Co-op
draws from catchments that are over-allocated or where water is scarce.
Topic 13.7 Water and effluents (GRI 303)
Food safety
and quality
The safety, quality and traceability of our products, and the risk of
contaminants or non-compliant substances with the potential to cause harm
to human health or to negatively impact customer supply chains.
Topic 13.10 Food safety (GRI 416)
Topic 13.23 Supply chain traceability
Material topics guiding our reporting
This sustainability reporting is structured on those issues rated as significant, as outlined in the table below. For each topic we have evaluated and defined our primary impacts, along with
their connections to the United Nations Sustainable Development Goals (SDGs). This is informed by GRI 13: Agriculture, Aquaculture and Fishing Sectors Standard (2022), which suggests
likely material topics for organisations in these sectors.
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MATERIAL TOPICDESCRIPTION OF FONTERRA’S KEY IMPACTSRELEVANT GRI 13 & TOPIC STANDARDS
LINKS TO THE UNITED NATIONS
SUSTAINABLE DEVELOPMENT GOALS
Health, safety
and wellbeing
Our employees, contractors and farmers and others within our supply chain
can be exposed to hazards that impact their physical health. In addition, their
mental health and wellbeing can be impacted if they experience excessive
working hours, stress, bullying and harassment or a lack of cultural safety in
the workplace.
Topic 13.15 Non-discrimination and equal opportunity
(GRI 405 & 406)
Topic 13.19 Occupational health and safety (GRI 403)
Animal health
and wellbeing
Adverse impact to animal wellbeing on dairy farms could occur through
weather exposure, their mistreatment, including during transportation,
and separation.
Topic 13.11 Animal health and welfare
Nutrition
and health
The health and wellbeing benefits for consumers of our products that are
derived from key macro- and micro-nutrients present in dairy products.
Fonterra’s role in alleviating food insecurity in Aotearoa, New Zealand and
other markets through food donations.
Topic 13.10 Food safety (GRI 416)
Economic impact
and employment
The positive long-term economic impacts created by Fonterra and its
farmer shareholders, which include employment opportunities and regional
income creation.
Topic 13.20 Employment practices
Topic 13.22 Economic inclusion (GRI 201 & 203)
Sustainable
packaging
The packaging of our products can impact the environment when
mismanaged. This includes potential pollution from plastics, fibres
and chemicals and from emissions generated through the disposal
of packaging materials.
Protecting the human rights of individuals and communities affected by our business actions and relationships did not meet the materiality threshold for inclusion in this report.
We acknowledge our responsibility to respect universally recognised human rights for all people directly or indirectly impacted by our operations and decisions. Rather than treating
human rights as a standalone topic, we embed our respect of human rights across our range of policies and standards including our Code of Business Conduct, The Way We Work.
Each year we also release a standalone Modern Slavery Statement setting out our human rights commitments, risk management practices, due diligence processes and actions taken
in the reporting year.
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Material Topics
Biodiversity and land
At Fonterra, kaitiakitanga – how we
care for our environment – is central to
safeguarding opportunities for future
generations. We are committed to
supporting strong healthy environments by
taking an integrated approach to
managing the environmental impacts
of our operations and supply chain.
Healthy ecosystems and soil are essential to the long-
term success of our farmers and the Co-op, and to the
communities in which we operate. Our activities have the
potential to contribute to biodiversity loss, poor soil health
and reduced ecosystem resilience, impacting the health of
freshwater and the community.
Our Approach
The Environmental Global Policy and Sustainability Global
Policy, supported by detailed standards, guide how we
manage the impact of our operations on biodiversity and
ecosystems. All business units are required to integrate
and prioritise sustainability and environmental outcomes
into their planning, execution and management processes.
These policies and standards also require us to work with
key stakeholders in our value chain to encourage the
adoption of similar policies and practices.
For farmers directly supplying milk to the Co-op, we
provide them support to adapt to regulatory changes,
identify environmental risks and prioritise improvement
actions tailored to their specific circumstances.
This section covers our impacts,
our responses and progress
managing our material topics.
Climate change is a material topic for the
Co-op and is reported upon in detail in
the Group Climate Statements section
of this report.
Tomika & Tiaki-Jack, Bay of Plenty
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Our initiatives include promoting good farming practices
such as nutrient management, land management techniques
that minimises soil disturbance and riparian management.
Our Forest and Agriculture Products Sourcing and
Procurement Standard reflects internationally recognised
principles. It details our commitment to work towards using
palm oil that is 100% certified segregated or higher. This
standard also outlines our commitment of no deforestation
across the Co-op’s primary deforestation-linked commodities,
as reported upon in our Group Climate Statements.
Matt, Lewanna & Adam, Taranaki
Bridgeman Farm, Taranaki
Our Progress
Supporting supplying farmers
Helping farmers identify strengths and opportunities for
improvement is a priority for us. It is where we can add
value for farmers, our customers and communities.
In New Zealand, our team of 42 Sustainable Dairying
Advisors (SDAs) has worked with our supplying farmers
to develop Farm Environment Plans (FEPs). These plans
are tailored to each farm, capturing specific environmental
characteristics, assessing current activities against
industry-defined Good Farming Practices (GFP) and
agree prioritised improvement actions.
Our goal is for farmers to be prepared for future
regulations and the requirements of our customers.
Regulatory requirements vary between different regions
in New Zealand, and in the majority of cases the topics
covered by a Fonterra FEP will go beyond these. Where
the local requirement is higher, we work with farmers and
the wider industry to support meeting future requirements.
The FEP framework is assessed and evolves annually, with
new modules added nearly every year since we launched
the service in 2018. Current topics include water, land
and soil health and management, biodiversity, nutrient
management, GHG emissions, efficiency and cultural values
such as mahinga kai (the value of natural resources) and
whakapapa (recognising the people and their connection
to the land over multiple generations). For the farms with
irrigation systems, approximately 19% in FY25, FEPs also
build on regulatory requirements for metering and support
irrigation efficiency improvements.
There has been a steady increase in the proportion of
supplying farms in New Zealand with a FEP, with an increase
of coverage from 93% last year to 100% achievement this
year. With this achievement, we have retired the target
and included the requirement for milk supplying farms to
have an FEP within the conditions of our 2025/26 season
Fonterra Farmers’ Terms of Supply. Another change to
these terms for the forthcoming season is that no supplying
farm can discharge effluent to water.
Farmers in New Zealand also complete annual Farm Dairy
Records, which serve as a key input for the Farm Insights
Reports the Co-op provides to them. These insights
reports detail information on nitrogen risk, milk quality,
GHG emissions and animal wellbeing, helping farmers to
benchmark their performance regionally and nationally,
while identifying potential performance opportunities
from making improvements.
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A similar FEP process is available to those farms supplying
the Co-op raw milk in Australia. It is tailored to Australian
farming conditions and practices and continues to be
developed. Seven modules are available, and each farm can
select the most suitable modules covering topics such as
general farm management, GHG emissions, animal welfare,
dairy calf management, effluent management, biosecurity
and water efficiency. Our focus this year was on GHG
emissions and nutrient management modules.
By the end of this year 58% of Australian supplying farmers
had a FEP customised to their needs, representing an
increase in adoption. We also introduced Farm Insights
Reports, which continues our benchmarking and action-
oriented approach to identifying on-farm efficiency and
improved performance opportunities.
In addition, all supplying farms in Australia are assessed
on food safety, quality and compliance with dairy licence
requirements by an independent party. Every farm is
assessed at least once every two years.
Our operations
We manage 31 farms in New Zealand that are close to
our manufacturing sites. Nine are milk supplying farms
with dairy herds and the rest are dry stock and cropping
with forestry.
Our farms are complementary to our manufacturing sites.
They make use of the excess water and nutrients from our
manufacturing operation to support pasture growth, which
allows us to grow and supply supplementary animal feed
that is available to our supplying farms.
All farms we manage have a FEP and farm management
plan in place, tailored to the specific needs of the farm
and aligned with best practice.
Roundtable for Sustainable Palm Oil
We are a member of the Roundtable for Sustainable Palm
Oil (RSPO) and since 2015 all our palm oil purchases have
been certified through one of the RSPO supply chain
models. In the 2024 calendar year we purchased 30,125
tonnes of palm oil products as an ingredient, with 76%
RSPO certified to at least segregated supply level and
24% certified as mass balance. By volume, 91% of all palm
oil being purchased by our New Zealand business and
100% of all palm oil being purchased by our Australian
business is certified as segregated supply.
Our Forest and Agriculture Products Sourcing and
Procurement Standard requires internal reporting on
instances where 100% certified segregated supply of
palm oil is not achieved, driving changes in sourcing
practices. We continue to work with suppliers of direct
and indirect palm oil ingredients to achieve 100%
certified segregated supply.
Minimising solid waste
We continue to aspire to zero waste across our global
sites. Aligned with waste management principles, we
focus on year-on-year improvements to eliminate waste
sources. This includes producing to specification to avoid
production waste, collaborating with vendors to prevent
non-recyclable materials from entering our sites, and
partnering with others to expand the range of materials
that can be economically recovered.
This year, we again made progress reducing solid waste
sent to landfill, with the introduction of Solid Waste
Improvement Plans across our manufacturing sites.
These plans provide clarity on the waste streams and
volumes at an individual site level and identify avenues
to reduce solid waste, including piloting initiatives.
Tomika & Tiaki-Jack, Bay of Plenty
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To enable us to recycle petri dishes used in our labs to an
established recycling waste stream, we have designed
and built a bespoke machine to remove agar and clean
the dishes ready for recycling. We are also trialling a
repurposing option for spent membranes to be given
a second life for non-sanitary use.
Compared to last year, we reduced solid waste by
6% and by more than 36% since our FY19 base year.
These reductions were achieved through a combination
of waste minimisation and diverting away from landfill.
Our current intensity is also an improvement on last year
and has reduced to approximately 1.86kg of solid waste
per tonne of product.
Environmental management system
We have a comprehensive Environmental Management
System (EMS) that uses the internationally recognised
ISO14001 framework. The EMS includes monitoring of
environmental performance, strategic resource management,
and proactive collaboration with stakeholders to support
the protection and improvement of natural ecosystems.
In FY25, more than 80% of our manufacturing sites are
certified with ISO 14001:2015 or a similar alternative.
Partnering with others
Through our partnership with Trees for Survival, we support
schools and local communities to grow and plant native
trees. This year, we funded 21 schools across the North
Island of New Zealand, providing resources for school
nurseries where students nurture seedlings for planting.
In addition, we supported the expansion of Trees for
Survival into the South Island of New Zealand.
Through our Doing Good Together programme, we have
launched a partnership with Landcare Trust to distribute
$750,000 to community wetland projects during the three
years of FY25 to FY27. This partnership is supporting
community catchment groups across New Zealand in
protecting and restoring wetlands. Landcare Trust provides
on-the-ground advice to farmers and community groups
on land and water management practices. This year,
through the partnership we supported nine projects.

Our Performance
–Supplying farms with Farm Environment Plans
• 100% of New Zealand farms with a Farm
Environment Plan.
• 58% of Australian farms with a Farm
Environment Plan.
–Zero solid waste sent to landfill
• 36.7% reduction on our FY19 base year.
–Sourcing ‘segregated supply’ palm oil from
credible organisations
• All palm oil we purchase is RSPO certified.
• 76% RSPO certified to at least segregated supply.
Milk supplying farms with a Farm
Environment Plan
0%
20%
40%
60%
80%
100%
FY25FY24FY23FY22
AustraliaNew Zealand
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Water
Healthy freshwater, soil and ecosystems
are essential to the long-term success of
farmers’ businesses, the Co-op, and the
wellbeing of our people and communities
in which we operate.
Poor water management at manufacturing sites or
supplying farms can negatively impact freshwater and
marine systems. There are also potential water availability
impacts where the Co-op draws from catchments where
water is scarce.
When our manufacturing sites withdraw water and
subsequently discharge wastewater it can impact a
shared resource. We are committed to playing our part
to mitigate our impacts on water quality and maintain
water security for our operations and the communities
in which we are located.
Our Approach
Our Environmental Global Policy outlines our commitment
to integrated environmental management. Recognising
the importance of effective water stewardship, we take
a collaborative planning approach, assessing the health
of sourcing and receiving environments as a key outcome
for ongoing and long-term improvements. Our Global
Environmental Management Standard emphasises
responsible water use, stewardship and prioritises
the health of sourcing and receiving environments.
This includes taking an industry-leading approach
to effluent and wastewater treatment and planning
collaboratively for new plants and site upgrades.
Recovering water from milk when we make powder
products means that most sites discharge more water
than they take in. Through process enhancements and
the adoption of new technologies, we strive to further
reduce water usage and enhance wastewater treatment.
Our Progress
Managing our operational requirements
We completed a significant piece of work in FY24
to develop a Water Improvement Plan for each
manufacturing site. These plans have provided the
foundation for us to introduce a water improvement
roadmap focused on enhancing water security and
quality while continuing to reduce our water footprint.
We have nearly achieved our FY30 target of a 15%
reduction in water take across Fonterra manufacturing
sites from a FY18 base year. This means we are using
about 7,000,000m3 less water at our sites now compared
to seven years ago
1
.
This year, our Te Rapa site has reduced water take by
approximately 1,300,000m3. The savings are in part
due to the barometric leg system, which drew river
water to maintain a vacuum seal, no longer being used.
These savings are expected to be maintained next year.
The Evaporator Condensate Recovery project at our
Edendale site has been another significant contributor to
reduced water take. Its implementation in FY24 reduced
the need to withdraw about 643,000m3 of fresh water
each year from an underground aquifer that is also the local
community’s water source, enhancing resilience against
potential water shortages due to low rainfall in the area.
1 Comparison is on a like-for-like basis and includes adjustments for acquisitions
and divestments.
Brown Farm, Bay of Plenty
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Combined, the above two initiatives have made a significant
contribution to the reduction in water withdrawn by our
manufacturing operations over FY24 and FY25. Alongside
the continuous improvement efforts across all global sites,
the reductions over the last two years represent a step
change in reducing the level of water withdrawn by our
manufacturing sites.
There have also been various other projects implemented
at our manufacturing sites in New Zealand this year. For
example, commissioning of a new wastewater treatment
plant at our Hautapu site. This project with an investment
of around $120 million will enhance the site’s resilience
to heavy rainfall and improve water discharge quality by
reducing the nitrogen and phosphorus levels. Treated water
will be distributed to our irrigation management farms or
it will be discharged to surface water if the conditions are
not suitable for irrigation The plant is expected to be fully
operational next year.
Another example is the collaborative approach we’ve
taken to managing water discharge at our Longburn
site. We proactively engaged with the local council, iwi,
landowners and other stakeholders to develop a solution
where treated wastewater is irrigated to land and only
discharged to municipal treatment plants when conditions
are unsuitable for irrigation, eliminating discharge to
surface water and the need for a new wastewater facility.
In Indonesia, we’ve integrated an existing rainwater
harvesting system into the site’s water treatment plant
to meet required water quality standards. Approximately
a quarter of the site’s water use is now sourced from
rainwater, reducing demand on the municipal water system.
Living Water legacy projects
Last year we reported on the conclusion of our 10-year
Living Water partnership with the Department of
Conservation, which resulted in 70 projects being
completed and more than 40 tools and approaches being
trialled to improve biodiversity and freshwater quality.
Below are examples of the several Living Water projects
that have been ongoing this year.
Kaipara Moana Remediation
Kaipara Moana Remediation (KMR) is a decade-long
collaboration to protect and restore the Kaipara Harbour,
the largest harbour in the Southern Hemisphere covering
6,000km2 of catchment, seven major river systems and over
8,000km of waterways flowing into the harbour. It is home
to rare ecosystems in New Zealand including sand-dune,
seagrass, freshwater and estuarine wetlands and provides
a nursery for much of New Zealand’s snapper fishery.
Bringing together central and local government, local
iwi and primary industry, KMR invests in projects to
restore wetlands, fence rivers and streams, plant trees
and regenerate forest on erosion-prone land. These
efforts enhance biodiversity, support on-farm carbon
sequestration, and improve resilience to extreme
weather. Last year the partnership with KMR supported
approximately 100kms of new fencing to protect
waterways and retired steep, eroding hillsides and gullies
and planted around 54,000 native trees and plants.
With dairy farms covering approximately 20% of the
catchment, our partnership is an important contributor
to KMR’s long-term goal of halving sediment flows
into the harbour. Building on our existing processes and
relationships, the partnership provides advice and access
to KMR funding. It also sustains jobs and training through
KMR’s relationships with local businesses.
Through the KMR partnership, the Co-op is building
technical capability that supports the rural communities we
are part of and helps farmers with environmental planning.
Kaipara
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Whakamana te Waituna
Waituna Lagoon and its surrounding wetlands and
waterways are areas of environmental and cultural
importance, providing an internationally significant
ecosystem for wildlife. It is also located in a key
dairying region.
We are a partner in the Whakamana te Waituna
partnership, which was formed in 2018 following years of
collaborative effort by the farming community, agencies,
iwi and other stakeholders to reduce the impacts of
nutrient, sediment and biodiversity losses on Waituna
Lagoon/Waipārera. It focuses on five areas: restoring
wetlands and lowland forest, redesigning waterways to
reduce sediment and weed growth, reducing nutrient
losses through on-farm practices, reconnecting
iwi with the whenua, and realising the benefits of
biodiversity and carbon for sustainable financing.
To date, the programme has retired more than 580 hectares
of farmland to create a buffer around Waituna Lagoon,
returned around 40 hectares to Awarua Rūnanga to
establish a mahinga kai pā, established approximately
16,000 plants on-farm and a similar number of plants along
the Waituna Creek, and created more than 20 hectares of
ponds and wetlands.
The long-term goal of the partnership is to repurpose
approximately 10% of the Waituna catchment (total of
2,000 hectares) into uses that support water quality and
biodiversity improvements that are also profitable and self-
sustaining. The partnership is now part of a national pilot
through Ministry for the Environment, that is exploring a
voluntary nature credit market for New Zealand.
Working with The Nature Conservancy Aotearoa NZ
We are supporting the work of The Nature Conservancy
Aotearoa New Zealand (TNC NZ) to build an evidence-base
for New Zealand coastal restoration projects to participate
in blue carbon credit markets.
Coastal wetlands can store CO
2
emissions, mitigate
flooding and storm surges, and shelter native species.
New Zealand’s coastline is the ninth longest in the
world and more than 90% of its wetlands have been
altered through land use changes. Restoring these areas
delivers environmental and social benefits, and offers
potential for landowners to access new income sources
through mechanisms such as blue carbon credits and
resilience credits.
TNC NZ is leveraging global expertise and conducting
research across seven representative coastal wetland sites
(pre-restoration) to generate a snapshot of existing soil
carbon stocks, GHG emissions and sediment build-up to
form a baseline against which restoration efforts can be
measured. In collaboration with others, TNC NZ is also
contributing to a blue carbon roadmap to advance coastal
wetland restoration efforts nationwide.
Our Performance
–Reduction in absolute water take across
manufacturing sites between FY18 and FY30
• 14.7% reduction in absolute water take.
By agreement, or for emergency community support,
we provide some water to third parties. This year, we
supplied approximately 481,000m3 to third parties.
For further reporting on our performance and reporting notes
on water please see the Sustainability Reporting Appendix.
Robert Findlay Wildlife Reserve
Water take across manufacturing sites
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
FY25FY24FY23FY22FY21
Water take reduction relative to FY18
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Nutrition and food safety
Milk and dairy products are naturally
nutritious foods and provide valuable
and unique source of essential nutrients
that support health outcomes across
all life stages.
Milk and dairy products offer high-quality protein,
containing all the essential amino acids in easily digestible
forms, along with a wide range of vitamins and minerals
that are readily absorbed by the body. These characteristics
mean milk and dairy products are both nutrient-rich and
nutrient-dense. To safeguard against the potential for food
safety concerns, we prioritise maintaining the safety, quality
and traceability of our products across the supply chain.
Our Approach
Our Nutrition Global Policy outlines our commitments to
delivering science-based nutrition and health benefits,
tailoring products to meet specific nutritional needs and
marketing responsibly.
Supporting the policy is our Nutrition Standard and
detailed Nutrition Guidelines that comply with national
food standards and regulations. Together our policy
commitments are designed to contribute to healthy
sustainable diets.
We promote our products responsibly and take particular
care when marketing to younger people and their
caregivers. Our Marketing to Children Standard sets
strict nutrition criteria for any of our products marketed to
children. We also support and promote the aim and intent
of the World Health Organisation Code for the Marketing
of Breast Milk Substitutes, and are committed to complying
with the relevant industry codes, such as the voluntary
EU Pledge, in countries where our products formulated
for infants and young children are sold.
All of our food products undergo health and food safety
assessments prior to launch and on an ongoing basis.
Our Global Food Safety and Quality Policy outlines our
commitment to uncompromising food safety and world-
class quality across every aspect of our supply chain. This
policy is supported by standards for safe food production
and guidelines on best practices such as allergen
management, and good manufacturing practices.
Our robust food safety and quality system means we
have a clear, consistent framework to deliver safe, quality
products worldwide.
Our Progress
The nutritional profile of our consumer
branded products
Our Nutrition Guidelines have been independently
reviewed and endorsed to confirm they are evidence-
based, grounded in robust nutritional science and reflect
international directives on nutrition and health
1
. These
guidelines establish the nutrition criteria and principles
for the composition and marketing of our consumer
products and ingredients.
1 The endorsement was provided in 2021 by the New Zealand Nutrition Foundation;
the Foundation closed in April 2025.
Mila, Taranaki
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Our target is for 100% of our everyday and advanced
nutritional products
1
, such as plain milk, natural cheeses,
spoonable and drinkable yoghurts and fortified milk
powders, to comply with our Nutrition Guidelines by
FY25. We reached the milestone of more than 90% of
our everyday and advanced nutritional products meeting
our Guidelines in FY23. Since then, we set this as the floor
to keep above, as we progressed towards the conclusion
of the target this year.
The composition of our consumer branded products
has continued to improve, taking into consideration the
levels of dairy protein and calcium, while also minimising
the addition of free sugars, refined carbohydrates, non-
nutritive sweeteners, sodium and saturated fat.
In addition, we also continue to develop products tailored
to specific nutritional needs. An example of this is the
innovation and development of speciality consumer-
focused protein products, such as the Anchor Protein+
Shake. We have also been expanding our Studholme site
to create a high value hub for protein ingredients for use
in products such as medical nutrition and high-protein
sports products.
This year, on a volume sold basis 99.1% of our
everyday and advanced nutritional products meet
our Nutrition Guidelines.
Dairy nutrition advocacy and education
Complementing our Nutrition Guidelines are our
educational and advocacy activities to raise awareness
of the value of dairy nutrition in healthy, balanced diets.
In 2023 we established the Nutrition Expert Panel to
provide independent and external nutrition expertise
to bring insight and credibility to all our actions related
to our nutrition identity. This year, we continued to
work with Panel members to guide our internal and
external communications on all aspects of dairy nutrition.
Members brought their independent expertise to specific
teams and activities, extending the reach of their insight
and impact across the Co-op.
To share our knowledge about dairy nutrition more widely
with our people, our customers and consumers generally
we also launched our Dairy Nutrition Hub on our website
in April 2023.
Through the Hub, we explain why milk is an important part
of a balanced diet, and how nutrient-rich dairy provides a
unique and valuable source of ingredients and essential
nutrients that support health outcomes across all life-
stages. Resources available through the learn and discover
section are backed by credible science. There are easy to
access videos and infographics for those wanting to delve
further, as well as articles and links to external sources.
We have seen a growth in users and engagement on the
Hub. Across the two years to April 2025, new users more
than doubled. The engagement rate in April 2025 was 58%
2
.
Product traceability
Our Raw Milk Harvesting, Collection and Transport
Standard is part of our Global Integrated Management
System and sets the minimum requirements that all farmers
must meet. This standard applies to all milk supplying
farms, collection points, co-operative owned vats and
chilling centres that supply raw milk to Fonterra around
the world. It builds on our requirement for compliance with
local regulations and it forms the basis for our on-farm
audits. Consistent implementation of this standard means
that milk is handled in a way that maintains its integrity,
safety and quality throughout the supply chain.
1 Fonterra global consumer branded products, excluding indulgent products such as
creams, desserts, and specialty cheeses.
2 The engagement rate is an indicator of whether users find the content relevant
and interesting.
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Our tankers are equipped with digital technology to test
milk before its collected from the farm. Globally 95% of
our manufacturing sites have total electronic traceability
from farm vat or milk collection centre, through our
processing sites and on to sale to the customer. For the
remaining 5% partial electronic traceability is supplemented
by manual processes. We have also implemented a new
laboratory information management system to help us
manage risks more effectively.
Our manufacturing sites also undergo internal audits and
regular scrutiny through third-party audits by regulators,
customers and certification bodies. These include self-
assessment questionnaires and independent audits against
the Sedex Member Ethical Trade Audit (SEDEX) four pillar
framework. Any areas identified for improvement through
internal or external audits are promptly addressed.
All our manufacturing sites are independently certified to
a leading food safety management system that adheres
to the Global Food Safety Initiative (GFSI) requirements.
Our sites hold either FSSC22000 or the British Retail
Consortium (BRC) certification.
In addition, any vendors providing ingredients, packaging
or third-party manufacturing must meet our FSQ
requirements, including holding a relevant certification.
Assurance & Audit
Our integrated Global Assurance Audit (GAA) is deployed
across all regions globally, as our one-way of internally
assessing food safety risk and compliance across
Fonterra-owned sites and warehouses. It supports sites
to enhance FSQ leadership, align actions and promote
continuous improvement.
GAA involves physical observations, employee interviews
and documentation reviews and has been deployed
across 100% of New Zealand sites and globally, all regions
have undertaken at least one round of audits against
the GAA framework.
For milk supplied to us we set clear expectations in our
annual Fonterra Farmers’ Terms of Supply on matters such
as regulatory compliance, producing safe, high-quality milk
and looking after people, animals and the environment.
Farms are regularly assessed by Fonterra and third parties.
In New Zealand, every supplying farm is visited each year
by an independent Farm Dairy Assessor who checks the
accuracy of the data submitted to the Co-op and verifies
the farmers’ achievements under The Co-operative
Difference programme.
If the requirements of our Fonterra Farmers’ Terms of
Supply are not met, after appropriate warnings we may
take further steps under our performance management
process. This could include suspending eligibility for The
Co-operative Difference payment and having our on-
farm advisors work with the supplying farm to develop a
timebound action plan. We may also pause the collection
of milk until we are satisfied that all minimum requirements
are being met and that actions to prevent the issue
occurring again have been completed.
In New Zealand to support on-farm change, 13% of farms
were placed into our performance management process at
some point during the season. Milk collection suspension
notices
1
were issued for three farms this year: one has been
resolved, one is on performance management and one
remains suspended.
Australia supplying farms are visited multiple times each
year by our Farm Source Professional Service Offer team.
All milk supplying farms are assessed by an independent
body for food safety and compliance with dairy licence
requirements. Every farm is assessed at least once every
two years. This year, 49% of farms were assessed, and
9% of those farms were identified as major or critical
for follow-up and resolution by the regulator.
Our Performance in FY25
–Fonterra branded consumer everyday
and advanced nutrition products meeting
nutritional guidelines
• 99.1% meet our endorsed Nutritional Guidelines.
–Global manufacturing sites certified to a
leading food safety management system
• 100% of our manufacturing sites are certified
to FSSC22000 or BRC.
–Global manufacturing sites with electronic
traceability
• 95% of our global manufacturing sites have 100%
electronic traceability from the farm vat or milk
collection centre to the first sale to the customer,
meaning we can track the origins of nearly any
product within minutes.
• For the remaining 5% of our global manufacturing
plants, all have some electronic trace capability
within their own local systems and some manual
steps are required to complete the analysis.
–Compliance with regulations
• There were no consumer recalls of product for
FSQ safety reasons and none of our products
were delisted from sale in any country.
1 The results presented reflect the New Zealand 2024/25 milk season, which is from
1 June 2024 to 31 May 2025. Suspensions due to formal performance management
processes, which excludes proactive on-farm changes, such as milking shed
refurbishments, that require assessment prior to milk collection recommencing.
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Health, safety and
wellbeing
Our ambition is to create a work
environment where our people are
safe and healthy.
Continuously improving health, safety, and wellbeing
(HSW) is fundamental to our business and essential to our
long-term success. Our employees, contractors, farmers
and others within our supply chain may be exposed to
hazards that could impact their physical health, safety and
wellbeing. In addition, workplace conditions can affect
mental health and overall wellbeing.
Our Approach
We refreshed our Global Health, Safety and Wellbeing
Policy this year, to emphasise that safe work and thriving
people are critical enablers to an enduring Co-op, where
we are good together and get better every day. This policy
is overseen by our Chief Executive Officer and Board
providing accountability and leadership.
Continuously striving to make work safer for our people
is fundamental to our business and essential to our
sustainable success. We are committed to achieving our
strategic health, safety and wellbeing goals through:
–leaders who demonstrate authentic commitment
by continuously engaging with their teams to foster
a culture of care and curiosity and model our Safe
Operating Mindset principles.
–learning systems that encourage exploring the realities of
our peoples’ everyday work, learning from incidents, and
valuing insights from both internal and external sources
to support continual improvement.
Brad, Edendale
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–risk management practices that prioritise efforts on
risks with the potential to cause serious physical or
psychological harm; actively strive to reduce exposure
to those risks; and ensure controls are consistently and
effectively applied.
–work design that creates value for our people,
incorporates error tolerance, and supports healthier
and safer outcomes through thoughtful system and
process development.
–supportive environments that promote physical,
mental, and social wellbeing and offer assistance for
recovery and return to work following injury or illness.
The Health and Safety Performance Reporting
Standard details the minimum requirements for
monitoring, measuring, and reporting health and safety
performance to evaluate on-going performance and drive
continual improvement.
Our performance is measured and reported to the Fonterra
Management Team and our Board each month.
Our Progress
Safe Work, Thriving People
Our Safe Work, Thriving People five-year 2030 strategic
plan focuses on building leadership and culture, learning
from unwanted health and safety events, reducing our
risks, enhancing operational resilience and designing safe
work. We are twelve months into the plan and our focus
over the last year has been on developing a significant
programme focused on Critical Health & Safety Risk Control
Management to shape our management of these risks.
Our plan is underpinned by our Safe Operating Mindset
Principles that focus on improving safety and operational
excellence by understanding the complex interactions
between people, processes, and the organisational context.
The principles build understanding of how work is done,
identify what helps and hinders performance and build
error-avoidant and error-tolerant systems.
Prioritising HSW in our operations
Alongside our Safe Work, Thriving People strategic
plan we have continued to invest in projects aimed at
eliminating or minimising exposure to critical health
and safety risks and assessing the effectiveness of
our systems. This includes implementing an electronic
Permit to Work system and new Contractor Safety
Management processes. In the first phase of our Fatigue
Risk Management programme, we have installed fatigue
detection and response technology – Guardian Seeing
Machines – in our New Zealand milk tanker fleet.
We are transitioning the approach taken through our
traditional health and safety investigations with a new
learning review framework to facilitate better learning
from health and safety events.
Fonterra Safe Operating
Mindset Principles
People make
mistakes
Learning
is vital
Blame fixes
nothing
How leaders
respond
matters
Context
drives
behaviour
Controls save
lives
Geraldine & James, Palmerston North
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Learning reviews assess control performance, identify
contributing factors, and encourage effective risk
mitigation actions.
The Global Integrated Standard for Earthquake Safety
and Resilience was launched this year, demonstrating our
commitment to managing risks that are unlikely to occur
but could cause life-threatening harm if they do.
A journey of innovation and safety
Whareroa is one of Fonterra’s largest manufacturing
sites. Managing hazardous substances such as ammonia,
chlorine and LPG has been an operational challenge for the
teams responsible for site safety and has required careful
attention due to the complexity and scale of the site.
Through a multi-year transformation, the site eliminated
its highest-risk ammonia chilling process, greatly reduced
chlorine and LPG stores and adopted new technologies
such as advanced detection systems. This led to the safe
removal and repurposing of hazardous chemicals and
lowered the site’s risk profile. For these efforts the site
won the Safety category at the annual New Zealand Health
and Safety Safeguard Awards.
Collaborating with others
This year, we reaffirmed our commitment to leveraging
our Farm Source store network as a conduit to connect
Safer Farms with local farmers. This included supporting
Safer Farms in conducting a refreshed format for farmer
workshops to enhance farmer engagement. This not
only benefits our supplying farmers but is also crucial
for managing the health, safety, and wellbeing of our
employees at the small number of farms we operate
within New Zealand.
Our Farm Source team also supported a DairyNZ-led
research project aimed at reducing on-farm strains
and sprains, which won the Innovation category at the
Safeguard Awards. This three-year project sought to
identify common causes of farm injuries and involved
collaborating with farmers and workplace experts to
develop practical solutions to mitigate them. As part of
the project, three products were developed and made
available to farmers, with a fourth product in development.
Our Performance
–Work-related fatalities
• 0 work related fatalities
–Serious harm injuries
• 6 serious harm injuries. In FY25, a broader
definition of serious harm has been adopted.
Under the new definition we capture more
serious harm incidents and therefore have
a greater focus on reducing the risks that led
to the incident happening.
–Percentage of Health, Safety and Wellbeing
priority actions fully completed by due date
• 96%. We have focused on completing the
priority actions associated with the risks we
have identified.
–Number of recordable injuries
• 310 total recordable injuries (number
of employees with recordable work-
related injuries).
–Total Recordable Injury Frequency Rate
• 10 Total Recordable Injury Frequency Rate
(number of employees with work-related
injuries, per million work hours).
–Since 2014, there have been no health
and safety prosecutions connected to
Fonterra’s operations.
Beau & Kev, Waitoa
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Animal health and
wellbeing
Healthy cows and calves are essential for
producing high quality milk efficiently.
We expect all animals to be valued and
treated with respect and care throughout
their lives.
Animal wellbeing and biosecurity on farms that supply us
with raw milk around the world and the small number of
farms we manage in New Zealand is important to us.
The potential for risks to animal wellbeing at farms within
our supply chain can arise from factors such as weather
exposure, neglect, separation or transportation challenges.
In addition, customers and consumers increasingly expect
food producers to demonstrate that animals are healthy
and are treated with respect throughout their lives.
Our Approach
Fonterra farmers are required to uphold high standards
of animal wellbeing and comply fully with all regulations
and codes of welfare and to continuously improve animal
wellbeing. These requirements are outlined in the Fonterra
Farmers’ Terms of Supply and are guided by our overarching
Global Animal Wellbeing and Biosecurity Policy and
supporting standards. Together they define our principles
and commitment to the importance of providing quality of
life for the animals, by attending to their wellbeing and to
continuously improve biosecurity preventive measures.
Senior leadership for our New Zealand Farm Source
business unit is responsible for developing strategy, policy
and standards for global management of animal wellbeing.
Local management and implementation is supported by our
centralised veterinary and animals teams. Business units
responsible for dairy cattle must have processes in place
to monitor animal wellbeing.
We partner with supplying farms to continuously improve
animal wellbeing practices and outcomes, focusing on the
overall mental and physical experience an animal may have
because of its nutrition, health, environment, behaviour
and interactions.
If any of our people identify a serious animal wellbeing
event it must be escalated, including notification to
our incident management team. We also continued
our participation in the Animal Welfare Early Response
Service in New Zealand. This service includes a hotline
that anyone can use to raise concerns about animal health
and wellbeing for impartial assessment. It also provides
a confidential support system to help farmers and others
involved in caring for animals to address issues by solution
identification and early intervention before concerns can
escalate into welfare issues.
Our aim is to promote the positive experience
of the Five Domains, while eliminating any
practices that contravene the Five Freedoms.
Building on the Five Freedoms concepts, the
Five Domains model includes four physical
domains that combine to create the fifth
domain of mental state.
1. Freedom from hunger or thirst:
Good nutrition
2. Freedom from discomfort:
Good environment
3. Freedom from pain, injury or disease:
Good health
4. Freedom to express normal behaviour:
Appropriate behaviour
5. Freedom from fear and distress:
Positive mental state
Lewanna & Adam, Taranaki
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Our Progress
We require all on-farm practices to fully comply with
legislation, regulations and animal welfare codes, including
meeting the requirements set out in Fonterra Farmers’
Terms of Supply for the season. We also require farmers
to notify us should their farm be under a biosecurity,
veterinary medicines or animal welfare inspection by
the SPCA or a government agency.
Animal Wellbeing Plans
Driving adoption of Animal Wellbeing Plans (AWPs) by
supplying farmers is our primary approach to further
embed the Five Domains of animal wellbeing and to
help farmers demonstrate high levels of animal care.
We know that farmers who focus on animal wellbeing and
have a good relationship with their veterinarian will usually
achieve better outcomes for their animals. Therefore, each
AWP in New Zealand must be developed with, and signed
off by a registered veterinarian every season.
Since we set the target for 100% of milk supplying farms
in New Zealand to have an Animal Wellbeing Plan by the
end of FY25, adoption rates have steadily increased. This
year 92% of supplying farms have an AWP in place. All farms
that the Co-op directly manages with dairy herds on them
have AWPs.
To achieve recognition and payment levels within the
Co-operative Difference
1
framework this season, the
farm must have an AWP agreed by a veterinarian within
the previous 12 months and include key elements related
to the Five Domains, such as mastitis and lameness,
care of calves, mortality, body condition scoring, prudent
use of antibiotics, mitigation options for heat stress and
other extreme weather events, and consideration of
genetic improvement strategies. These elements have
been identified and prioritised in collaboration with The
New Zealand Veterinary Association and DairyNZ and
included to enhance animal wellbeing outcomes. In the
2024/25 season, 91% of farms achieved one of the three
Co-operative Difference levels.
For the 2025/26 season, the requirement for each supplying
farm to have a veterinarian agreed AWP in place that
is updated each season is now embedded into our Fonterra
Farmers’ Terms of Supply. This plan must consider nutrition,
animal health, environment, reproduction and young stock
management. Maintaining an active AWP continues to be
a requirement for a farm to achieve the first level of the
Co-operative Difference.
Ruby, Southland
1 The Co-operative Difference provides a clear signal to farmers about what needs
to happen on-farm within the season so we can meet our customers’ needs today
and into the future.
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Insights, tools and training
In New Zealand, farmers complete an annual Farm Dairy
Record, which informs the Farm Insights Report we provide
to each supplying farmer. In Australia, the farmer’s FEP
together with the milk production and quality data we
gather provides the basis for their Farm Insights Report.
Farm Insights Reports give farmers detailed information
on the profitability, productivity and sustainability
performance of their farm relative to regional and national
benchmarks, and the potential benefits associated with
making certain improvement actions.
Key metrics related to animal wellbeing and efficiency
detailed in the Insights Reports include somatic cell count,
milking efficiency, mastitis rates, heat stress, lameness
and biosecurity risk with Bovine Viral Diarrhoea (BVD)
management as the lead indicator.
We support farmers to implement improvements identified
in their Farm Insights Reports through several tools and
services we have developed and through connection
to external expertise. The aim is to support farmers to
realise the potential opportunities identified in their
Farm Insights Report.
In Australia, the Farm Source team conducts multiple
on-farm visits annually through the Farm Source
Professional Service Offer, providing expertise across
agronomy, animal nutrition, human resources, financial
support, animal health and milk quality. We also carry out
proactive animal health and wellbeing checks on farm.
In cases requiring support, our management approach
is defined by our processes for animal health and welfare
issues, which includes collaboration between the Farm
Source team, industry experts, and regulators to assist
farmers in resolving concerns.
The development of FEPs lays a path for continual
improvement of the environmental priorities farmers
set for their business. A module, specific to Australia,
is included on animal health and welfare. This module
covers dairy cattle throughout their life. This year, 58%
of these farms have implemented FEPs.
We have also partnered with Dairy Australia to provide our
supplying farmers with animal wellbeing advice, training
and support. These training sessions are facilitated or
directly provided by our Farm Source team.
In Sri Lanka our Supplier Relationship team has introduced
initiatives to enhance animal health, including supporting
enhanced fodder availability, silage production, clean
milk production and animal treatment. In collaboration
with regional veterinary officers from the Department
of Animal Production and Health, we have facilitated
mobile veterinary clinics that visit selected farms to assess
and support farmers with animal health. We have also
organised training programmes between the Department
and farmers. These programmes emphasise good farming
practices and animal wellbeing.
Tools and Services Pilot
In 2024 we piloted the direct funding or subsidising of
a range of on-farm services and activities to help our
farmers improve their production efficiency and reduce
their emissions intensity. This pilot was implemented with
the support from our customer, Mars. Amongst the pilot
were tools that support animal health outcomes, including
Johne’s disease testing, BVD testing and herd testing,
to offer practical information to support herd health
and productivity.
Johne’s disease testing when carried out regularly
alongside effective management practices can minimise
disease transmission to reduce clinical disease and
subclinical production losses. This service was a popular
choice for farmers during the pilot and supported animal
wellbeing on-farm. Similarly, the BVD testing received
strong interest, providing farmers with the insights to
identify and remove persistently infected animals from
their milking herds. This proactive approach helps to
prevent transmission of BVD in herds.
Another choice farmers took was funding for an additional
herd test. This additional test resulted in more data points
to identify top-performing animals to support farmers to
make data-driven breeding decisions that enhance herd
and milk quality.
This successful pilot has given us the confidence to extend
the options to more farmers for the 2025/26 season.
Michael & Kimberly, Southland
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Proactive monitoring
In analysing our data on food safety, milk quality and
compliance, we look for patterns that could indicate a
farm at risk of animal wellbeing compromise. We have
incorporated artificial intelligence into our analysis
to prioritise farm visits and offer additional support
to farmers even in cases where no immediate animal
welfare concerns are identified.
Milk quality improvement visits by one of our ten Milk
Quality Managers also form part of our on-farm support
to farmers in New Zealand. If appropriate, the opportunities
to better manage mastitis and lower bulk Somatic Cell
Count (SCC) are explored. This is because a low SCC
not only reflects milk quality, but it is also a measure
of good animal wellbeing. This count is an indicator of
sub-clinical mastitis. The lower the count, the lower the
incidence of mastitis. In addition to the on-farm discussion
during the milk quality visit, a report with improvement
recommendations is provided to the farmer.
SOMATIC CELL COUNT AVERAGE
(MEAN) (‘000 cells/ml)FY25FY24FY23
New Zealand164169172
Australia168180182
Sri Lanka 739705574
Global weighted average167170173
Grass-fed
In June, at the agricultural Fieldays the Government
launched the New Zealand Dairy Grass-Fed Administrative
Standard. This voluntary standard defines the criteria for
animals to be considered “grass-fed” in New Zealand. It
requires that dairy animals in the processors annual milk
pool must, on average, graze pasture or forage crops at
least 340 days per year for a minimum of 8 hours a day. In
addition, when their diets are considered on a 3-year rolling
average they must consist of at least 90% (freshweight) of
the types of grass feed detailed in the standard.
Fonterra is proud that our New Zealand milk pool complies
with the requirements of the New Zealand Dairy Grass-Fed
Administrative Standard. Our data shows that Fonterra
farmers’ cows, are on average 96%
1
grass-fed and spend
at least 350 days on pasture on average, surpassing the
standard’s requirements.
1 The average is measured over the previous three seasons’ data, considers
freshweight of grass feed and is subject to minor variations.
Our Performance
–Farms with Animal Wellbeing Plans
• 92% of supplying farms in New Zealand have
an Animal Wellbeing Plan prepared with their
veterinarian this year.
–Somatic Cell Count
• The overall global weighted average (mean)
for SCC this year is 167 (‘000 cells/ml).
In comparison to last year, the overall result
has improved again this year and remains
well below the European Union import/
export standard
2
.
2 The European Union import/export standard of 400,000 cells/ml is a widely
quoted benchmark.
Milk supplying farms with an Animal
Wellbeing Plan
0%
20%
40%
60%
80%
100%
FY25FY24FY23FY22FY21
New Zealand
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Economic impact and
employment
Delivering sustainable returns to our
farmer-owners is central to the Co-op.
By supporting the success of their farming businesses,
the people they employ and the vendors they rely on, we
contribute to economic development and regional income
creation. This year, through the milk price we returned
more than $15 billion to regional New Zealand. In addition,
dividend distributions from the Co-op contribute to the
income creation of our shareholders.
Aligned with our ongoing focus on economic returns for
our shareholders, our decision-making process integrates
earnings potential and opportunity costs to optimise end-
to-end value creation across the dairy value chain. This
approach assists us to continue delivering economic value
from the raw milk that we collect.
We also contribute to the livelihoods of our employees.
Fonterra directly employs 16,215 people on a full-time
equivalent basis, with more than 70% of those based in
New Zealand.
In New Zealand, industry-wide figures from March 2023
show that, in addition to those working in dairy processing,
the dairy sector employed 38,000 on farms and thousands
more in jobs supporting the local industry.
Our Approach
The Way We Work and global policies, including our Ethical
Behaviour Global Policy and our Diversity, Equity and
Inclusion Global Policy, set clear expectations for how our
people are required to act and behave. These policies are
supported by local guidance to reflect relevant regulations.
As part of our customer-led operating model,
understanding and connecting with local markets is vital
to our success. By hiring and developing local talent, we
contribute towards the shared success of our Co-op and
the countries where we operate. In each of our primary
locations, more than 85% of senior managers are hired
from the local community
1
.
We respect and value everyone’s uniqueness, recognising
that diversity strengthens the Co-op and contributes
to its success and sustainability. We are committed
to identifying and unlocking our people’s potential by
developing capability, leadership and talent through
coaching, learning, and regular feedback.
All stages of employment are considered through our
Employee Lifecycle Global Integrated Standard. This
standard outlines the requirements and approaches to
be taken to provide consistent, positive experiences that
support our peoples’ engagement and wellbeing.
Our remuneration framework for salaried staff includes
base salary, benefits such as KiwiSaver, superannuation
and insurance where applicable. It also includes variable
remuneration (incentives) where appropriate. Employee
pay is benchmarked against comparable companies in
relevant markets, using information from independent
remuneration consultants. No matter who we are
recruiting, we check that any preferred candidate has
the legal right to work. This includes confirming they are
of at least minimum working age.
1 On a headcount basis.
Georgia, Te Rapa
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Reflective of our commitment to the Conventions of
the International Labour Organisation for all Fonterra
employees, the Co-op has long-standing agreements
with the International Union of Food and the New Zealand
Dairy Workers Union. Other active unions include E tū and
AMEA. In New Zealand, 60% of all full-time equivalent
Fonterra employees are covered by collective bargaining
agreements. Union agreements and relationships are also
in place in many other markets.
A free, independently administered and confidential
whistle-blowing hotline, The Way We Work Hotline,
is available to all employees globally to raise concerns
about behaviour not aligned with our Code of Business
Conduct, The Way We Work. This hotline is also available
to our business partners, vendors and milk suppliers
amongst others.
We also provide an Employee Assistance Programme (EAP),
a confidential service paid for by Fonterra. Our employees
and their immediate families can seek independent
professional support and counselling in any area of their
personal or working life. Recognising the value of this
service, in 2022 we extended access to this service to
our supplying farmers.
Our Progress
Learning and development
Ensuring our workforce has the skills to deliver now and, in
the future, remains a critical enabler for Fonterra achieving
its strategic goals. We continue to increase investment in
re-skilling and training, building the capabilities our people
need to succeed in a fast-changing environment.
In FY25, around 15,000 of our employees participated
in recorded learning, reflecting our strong culture of
continuous development. Our focus this year has been on
strengthening leadership capability to support the relaunch
of our values and strategy, equipping leaders to lead
through transformation, and embedding the skills needed
to support high-performing teams. More than 2,600 people
leaders took part in structured programmes, including
workshops on storytelling, leading through change,
adaptive leadership, and people leader capability. We also
delivered the Management Essentials Programme across
New Zealand and Australia, with strong uptake of both in
person and digital formats.
Our commitment to Te Ao Māori continues to grow. Over
430 employees across New Zealand and globally completed
the Te Ao Māori Foundations programme, and our first
cohort of 11 employees completed the beginner-level Te
Reo Māori facilitated pathway. In addition, 26 senior leaders
commenced Puna Kawea, our Māori Leaders Programme,
helping us to build leadership diversity and uplift Māori
representation at senior levels.
We also maintained a strong focus on building our talent
pipeline. Early careers programmes saw positive progress,
with increased female and Māori or Pasifika representation
compared with 2024. Across apprenticeships, traineeships
and graduate programmes, more than 50 participants
completed structured pathways, while 249 learners gained
accreditation through NZQA or tertiary providers.
Looking ahead, our focus will remain on making learning
more accessible and engaging through technology, while
continuing to invest in the leadership and technical skills
that underpin our long-term success.
Diversity, equity and inclusion
Creating an inclusive Co-operative is an investment in
our greatest asset – our people. Inclusion is essential to
delivering our strategy, living our values, and making a
meaningful impact in the communities we serve.
We bring the principles of whanaungatanga (belonging),
manaakitanga (care), whakaohooho (inspiration)
and kaitiakitanga (empowerment) to life across
our organisation.
Theepan & Chujun, Palmerston North
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This year, we refreshed our Diversity, Equity and Inclusion
Strategy to provide a clear pathway of actions to further
embed an inclusive culture, leadership and employee
experiences across the Co-op.
To grow diverse representation, we have continued to
invest in strategic partnerships that support Māori and
Pacific peoples, such as TupuToa and Pūhoro STEMM
Academy. These partnerships sit alongside our Careers
in Dairy programme and support for First Foundation to
help create pathways for talented young people from
diverse backgrounds.
Our employee learning and development programme
includes training on understanding diversity, equity and
inclusion, supporting mental health and wellbeing in the
workplace and employee relations. Navigating unconscious
bias e-learning modules are available to all our people and
we encourage hiring managers to engage in this learning
prior to starting a recruitment process.
We are strengthening the visibility and support for women
through our partnership with Global Women to provide a
speaker series, podcasts and development opportunities.
Local network initiatives continue to support women
in operational roles. The refresh of our GenderTick
accreditation is another of our actions towards advancing
gender equity.
Another step we have taken this year is to partner
with a recruitment specialist to conduct a inclusivity
audit, assessing our recruitment practices across eight
lenses of gender, ethnicity, neurodiversity, LGBTQ+,
socio-economic backgrounds, faith, age and caring
responsibilities. This provided a clear, actionable set
of recommendations that we are now implementing.
This year, we introduced a Māori Workforce Plan focused
on increasing Māori participation, strengthening visibility
and belonging, and creating pathways to grow Māori
representation in leadership. To accelerate progress, we
appointed a Māori Workforce Lead and regularly report
on progress towards our Inclusion Strategy to the People,
Culture and Safety Committee.
We also launched Pasifika and neurodiversity networks and
took part in the Hidden Disability Sunflower initiative. As
a Pride Pledge partner, we engaged in a Rainbow Inclusion
Stocktake to evaluate our inclusion practices across seven
areas to identify both strengths and opportunities. These
insights are helping to shape our actions.
To advance inclusive leadership, more than 60 of our male
leaders completed our first allyship programme, Mobilise,
by taking part in-person workshops and developing allyship
action plans.
We continue to track progress against our target of
40:40:20 representation in global senior leadership
1
.
This target refers to 40% female, 40% male, 20% of any
gender to provide the flexibility of female, male, non-binary
or open. This year, female representation is 39.1%.
In addition, the composition of the Fonterra Management
Team (FMT) has changed this year, resulting in the proportion
of women on the team decreasing to 33%. The proportion
of women on the Fonterra Board is currently 33%.
Looking ahead, we are committed to sustaining progress
in gender-diverse leadership, growing representation
of Māori and reflecting the communities we serve. With
clear targets and accountable leadership, we are building
a culture where everyone can belong, contribute, thrive
and drive our shared success.
1 Senior leadership for this metric is defined by Band 12+.
Charlene, Brad, Patrick, Julie & Jesse, Edendale
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In New Zealand, the gap on a median basis remains
unchanged at 0.97 in favour of males, which is equivalent
to a 3.0% pay gap and continues to compare favourably
with the most recent national statistic of 5.2% for the
June Quarter 2025.
Applying the additional methodology, when we look at like-
for-like positions the median gender pay parity overall for
salaried positions has narrowed to 0.98 at the end of FY25.
This is a 2.3% gap on a median basis in favour of males.
GENDER PAY GAP BY
JOB CATEGORY
GENDER PAY GAP –
MEDIAN
GENDER PAY PARITY
GAP – MEDIAN*
Senior Leaders0.95 
0.94
1.01 
0.99
Managers0.96 
0.96
0.96 
0.97
Professionals1.03 
1.04
0.96 
0.99
Waged0.87 
0.87
GENDER PAY GAP BY
LOCATION
GENDER PAY
GAP – MEDIAN
GENDER PAY PARITY
GAP – MEDIAN*
New Zealand0.97 
0.97
0.98 
0.98
Australia0.96 
0.96
0.98 
0.97
Greater China1.02 
1.07
1.00 
1.00
* Salaried employees only.
Support for parents
Our parental leave policy for New Zealand employees offers
extra care for primary carers who have been employed for
at least 12 months. We top-up government parental leave
payments to 100% of base salary or wages for 26 weeks
and annual leave at 100% throughout the parental leave
period. We also provide a one-off KiwiSaver employer
contribution upon return to work, covering the unpaid
leave period.
Secondary carers employed for at least 12 months
receive two weeks paid leave at 100% of their base salary.
Employees returning from parental leave can access
Te Hokinga Mai, a programme offering coaching and
counselling to support their transition back to work. This
year, we also teamed up with Crayon to pilot financial
advice for parents and continued to grow our Fonterra
Parent Circle, a space for parents to connect, share
experiences and access resources.
To further support returning parents, we have also adjusted
our Short-Term Incentive eligibility criteria. Employees
returning from a leave of absence, including parental leave,
now need only to have worked 30 days of the financial year
to be eligible, compared to the standard 90 days.
In FY25, in New Zealand 187 females and 19 males took
parental leave as primary caregiver, and 31 females and
129 males took parental leave as secondary caregiver. Of
employees who took parental leave 99% returned to work
and 87% were still with us 12 months later.
Closing our gender pay gap
We believe that after considering factors such as tenure,
qualification levels or experience there should be no
gender pay gap for any employees.
This is a complex topic and cannot be accurately
summarised by a single aggregated number. Instead, we
believe transparency is important, providing a breakdown
of the gender pay gap by geographies and job categories
1
.
Closing the gender pay gap remains a key priority. We
use an additional gender pay parity methodology for
salaried positions, facilitating improved internal tracking
and the identification of focus areas for long-term gender
pay plans. This methodology compares positions on a
like-for-like basis within each job category and country,
removing the impact of changes in gender representation
and currency. For example, a ratio of 1 shows no pay gap
where above 1 is in favour of females and below 1 is in
favour of males.
When looking at the gender pay gap overall, the ratio of
female to male base salary has narrowed this year to 0.97
on a median basis and remained at 1.04 on a mean basis.
This result continues to be influenced by factors such as
the different proportions of men and women in higher and
lower paid levels around the world.
Considering job categories globally, the gap for Senior
Leaders has widened in favour of males; the Manager
category remains consistent; the gap for Professionals has
widened but remains in favour of females; and for Waged
the gap is unchanged and remains in favour of males.
Bronte, Auckland
1 Where a breakdown of information represents a small number of employees we
omit this detail to protect the privacy of individuals.
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Non-discrimination
Through The Way We Work Hotline, two disclosures
were made this year relating to discrimination; one was
classified as discrimination and one as harassment.
Following investigations, the disclosure on harassment was
substantiated and the disclosure on discrimination was
partially substantiated. Once a matter has been raised, the
incident is reviewed to determine if a formal investigation
is deemed necessary. If the investigation determines
that an incident has been substantiated, remedial action
is taken (whether formal or informal, depending on the
circumstances) by a relevant manager, with support from
an appropriately qualified Fonterra representative. Relevant
senior stakeholders are informed of the action taken to
confirm that the action is appropriate in the circumstances.
Reporting to the Board on substantiated incidents also
takes place.
In addition to concerns raised through The Way We Work
Hotline, some discrimination and other employment issues
are raised through other channels every year. These are
reviewed and, where appropriate, formally investigated in
a similar manner as described above. Of the New Zealand
based complains which were raised relating to allegations
of discrimination or harassment, eight were substantiated
discrimination complaints, one of which was classified as
discrimination and seven as harassment. Remedial actions
were taken. An additional three harassment complaints are
open and under investigation. In respect of other countries,
one discrimination case is still active under investigation.
New Zealand
73%
Our Performance
–40:40:20 Gender Diversity
• 39.1% of senior leaders (Band 12+) are female.
For further information on our workforce composition,
including explanatory notes please see the Sustainability
Reporting Appendix.
FY25 employees by location (FTE)
Australia
9%
Asia
15%
Rest of world
3%
New Zealand
73%
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Sustainable packaging
Packaging plays a vital role in
delivering high-quality nutrition safely
and efficiently.
If not managed responsibly, packaging of our products
can negatively impact the environment, people, and
communities in which we operate. These impacts can
include potential pollution from plastics, fibres, and
chemicals as well as emissions generated from the
creation and disposal of packaging materials.
Knowing the source, composition, quality and functionality
of packaging materials is integral to our food safety and
quality system. Effective packaging enables us to protect,
transport and deliver our products to customers and
consumers around the world. While most of our products
are bulk ingredients for use by customers, the Co-op also
produces packaged goods for foodservice businesses
and consumers.
Our Approach
Our Values guide us on our packaging journey, as we
maximise the nutritional value delivered from every drop
of milk by minimising food loss across our supply chain.
Our approach is to embrace packaging innovation to keep
our food safe and of high quality from the farm to the
consumer, using reusable, recycle-ready or compostable
packaging materials
1
, where possible. We also collaborate
with others to enable greater access to waste collection
and recycling services. This approach supports better
outcomes for people, communities, and the environment
while delivering maximum return to farmers.
Our Board approved Environmental Global Policy and
supporting Global Environmental Standard stipulate
the requirements on all our sites to manage hazardous
substances responsibly, maximise manufacturing yield,
reduce waste and improve packaging of Fonterra-branded
products. The Fonterra Management Team is accountable
for ensuring appropriate policies and processes are in place
to effectively manage Fonterra’s environmental risks.
Our Progress
This year we have continued to consider the environmental
impacts of our packaging at key points in the lifecycle and
have implemented new opportunities to use recycle-ready
packaging materials, while maintaining our strict product
quality and food safety requirements. We have also been
actively supporting initiatives to increase recycling rates.
Our commitment to sustainable packaging
Fonterra is a member of the Australian Packaging Covenant
Organisation (APCO), a not-for-profit organisation driving
the development of a circular economy for packaging in
Australia. APCO works with government and industry to
reduce the environmental impact of packaging and improve
packaging sustainability. It also administers Australia’s
national regulatory framework.
In our 2025 APCO annual report, we achieved an overall
performance of ‘Beyond Best Practice’ which is the highest
performance level and indicates significant progress on
our packaging sustainability journey. Contributing to this
achievement was that 95% of Fonterra’s consumer products
for sale in Australia displayed the Australian Recycling Label
(ARL). This labelling scheme standardises symbols to guide
disposal options for packaging items.
1 We consider packaging circularity using globally accepted definitions for
packaging that is reusable, recyclable or compostable. This approach includes
packaging under the Co-op’s direct control, such as our use of recycle-ready
packaging, as well as external factors, including the availability of recycling
infrastructure in different countries.
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Improving our packaging
During the year we have implemented initiatives to reduce
the environmental impacts associated with the packaging
we use. Many of these are associated with the activities
of our consumer business.
–In Australia, our Stanhope site produces approximately
17,000 metric tonnes of 20kg cheese blocks each year.
To package these products, the site has transitioned
to using a recycle-ready film validated for food safety,
quality, and machinability on production lines. This
innovation substantially reduces the environmental
impact of the approximately 45 tonnes of plastic
used annually for packaging. We have also established
industrial collection contracts to recycle soft plastics
at our secondary processing sites, with future potential
for developing broader recycling infrastructure
for customers.
–In a similar initiative, we are transitioning approximately
270 tonnes of PVDC-based films used at our Tullamarine
site in Australia to recycle-ready packaging, delivering
improved sustainable packaging outcomes while
maintaining product integrity. This initiative eliminates
non-recyclable materials that can damage recycling
infrastructure, and the packaging will carry the ‘Check
Locally’ ARL, guiding consumers on appropriate disposal.
The commercial rollout began in July 2025, with full
implementation across all applicable products expected
by early 2026.
–Australia participates in the Big Bag Recovery program,
a government-accredited product stewardship scheme
that allows industrial customers to recycle one-tonne
bulk bags. Recycled bags are repurposed into items like
school chairs and water evaporation floating covers.
–Anchor Food Professionals has introduced recycle-ready
packaging for mini butter portions in the Middle East.
Our Dammam site produces these single-serve portions
on a newly installed production line, using recycle-ready
aluminium tubs and lids as a sustainable alternative to
composite materials. This innovation provides a premium
and sustainable alternative to plastic mini-tubs. The local
production reduces lead times and improves operational
efficiency for customers in the region.
We have been innovating in the use of AI to enhance our
packaging quality control and reliability. Developed by
our in-house Automation and Operational Technology
team, our AI-enabled image recognition system enhances
packaging quality control and reliability. The technology
uses AI-enabled image recognition to visually inspect 25kg
milk powder bags for damage across 56 packing lines.
Faulty bags are automatically rejected, and timestamped
images are captured for traceability. Approximately 66
million bags a year are being checked by AI, helping us
to reduce waste, downtime and continue producing
consistently high product quality. Building on this success,
the technology is also being used at our Clandeboye site
to monitor bulk butter packaging. If a fault is detected, our
operators are provided with an alert to intervene early so
they can keep the production line running efficiently.
Fonterra Tullamarine
Our Performance
We estimate that around 90% of our packaging
is recycle-ready
1
and 61% is reusable, recyclable
or compostable. These estimates are consistent
with FY24 and are on a total tonnage of packaging
basis, incorporating updates in the recyclability
status of individual packaging materials in FY25.
Based on this, our targets to achieve 100% recycle-
ready packaging and 100% reusable, recyclable or
compostable packaging by 31 December 2025 are
unlikely to be fully met before being retired at the
end of the year.
1 Recycle-ready packaging reflects packaging recyclability within the
Co-op’s control across Fonterra-owned branded primary, secondary
and tertiary packaging.
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Sustainability Target Summary
TOPIC
1
KEY PERFORMANCE INDICATORTARGE T
PERFORMANCE
COMMENTARYFY25FY24FY23
Biodiversity
and land
Farms with Farm Environment Plans
(New Zealand)
100% by FY25100%93%85%This target has been achieved in FY25 and will be retired. The requirement for
supplying farms in New Zealand to have a Farm Environment Plan in place has been
included in our Fonterra Farmers’ Terms of Supply for the 2025/26 season.
Solid waste sent to landfill (tonnes)Zero waste aspiration
% reduction since
FY19
6,280
36.7%
6,707
32.4%
7,505
24.4%
We continue to seek year-on-year improvements with a focus on making products
to specification to avoid food waste. We are working with vendors to prevent non-
recyclable materials coming on to our sites and partnering with others to increase the
range of materials that can be economically recovered.
WaterReduction in absolute water take
across manufacturing sites
15% reduction by
FY30 from a FY18
base year
14.7%12.4%6.7%We anticipate year-on-year performance variability as water demand fluctuates due
to various factors, including milk volumes, product mix, recycled water availability,
and project activity (e.g. food safety and quality aspects when commissioning new
production lines). We expect to see a downward trend over time as water-reduction
projects are realised. Please refer to ‘Water reporting notes’ for definition of ‘absolute
water take’.
Nutrition and
food safety
Percentage of everyday and
advanced nutrition products that
meet endorsed nutritional guidelines
Fonterra consumer branded products
100% by FY2599.1%98.5%97.1%Assessment of products against this target is based on protein, calcium and added
sugars. Everyday nutrition products are intended to deliver a daily source of dairy
nutrition. Advanced nutrition products provide a source of dairy nutrition and are
fortified for advanced nutrition and health benefits. This target is focused on consumer
products and the business that is in scope for divestment. The target is now retired.
Health, safety
and wellbeing
Work-related fatalities (employees,
contractors, on-site public)
Zero appetite000
Serious harmZero appetite61618In FY25, a broader definition of serious harm has been adopted. Under the new
definition we capture more serious harm incidents and therefore have a greater
focus on reducing the risks that led to the incident happening.
Percentage of Health, Safety and
Wellbeing priority actions fully
completed by due date
95% by FY2596%77%76%We have focused on completing the priority actions associated with the risks we
have identified.
1 Climate metrics and performance are covered in the Group Climate Statements.
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Sustainability Target Summary continued
TOPICKEY PERFORMANCE INDICATORTARGE T
PERFORMANCE
COMMENTARYFY25FY24FY23
Animal
wellbeing
Farms with an Animal Wellbeing
Plan established with their vet
(New Zealand)
100% by FY2592%90%85%We continued to make good progress toward achievement of this target, prior to the
requirement being transitioned into our Fonterra Farmers’ Terms of Supply for farms
supplying milk in the 2025/26 season.
EmployeesGender diversity (Band 12+)40:40:20 % ratio39.1%40.1%39.5%The target refers to 40.0% female, 40.0% male and 20.0% of any gender and reflects
our gender representation within Fonterra’s senior leadership globally, which for this
target is defined as Bands 12+.
Culture Measure81 for FY25817979Our culture measure reflects the results of our bi-annual employee engagement
survey, which is conducted with Microsoft Viva Glint. Our most recent survey was in
March 2025 and our engagement score was recorded as 81.
Sustainable
packaging
Reusable, recyclable or
compostable packaging
100% by end 202561%61%63%We estimate that around 61% of our packaging is reusable, recyclable or compostable
and around 90% is recycle-ready. These estimates are consistent with FY24 and
are on a total tonnage of packaging basis, incorporating updates in the recyclability
status of individual packaging materials in FY25. Based on this, our targets to achieve
100% reusable, recyclable or compostable packaging and 100% recycle-ready
packaging by 31 December 2025 are unlikely to be fully met before being retired at
the end of the year.
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Data Consolidation
This section provides supporting
information on the scope and approach
used to consolidate the sustainability
data presented in this report.
The primary reporting period is for the financial year
(FY25), 1 August 2024 – 31 July 2025. To align with
Australian regulatory reporting (NGERs), all Australian
manufacturing data is reported for period 1 July 2024 –
30 June 2025.
The base year for sustainability reporting is aligned to the
financial year ended 31 July 2018 (FY18), where possible.
The financial year end date for targets is 31 July of the
applicable financial year. The base years for targets
and other KPIs are indicated across our sustainability
reporting, as applicable. When a different reporting
period has been adopted, this is clearly identified in
our reporting.
Data boundaries
In general, Fonterra’s consolidated sustainability
performance in this report covers the activities of
Fonterra Co-operative Group Limited (the Group) and
its consolidated subsidiaries. For a list of the significant
subsidiaries in the Group, see Note 22 of the FY25 Group
Financial Statements.
For the Group’s consolidated environmental reporting,
we have adopted the internationally accepted approach
to adjust base year values and subsequent years for
acquisitions and divestments to report on a like-for-
like basis. When adjustments are made, information
regarding the nature of the adjustment, timing and
affected entities is disclosed. These adjusted figures
are used for performance reporting on progress towards
our targets. The impact from any closed entities or
facilities is included in the performance data, as well
as trend calculations.
Wherever possible, data is sourced from verifiable
primary data. For example, our water data is from supplier
invoicing, where relevant, or from metering used to satisfy
environmental resource permits, and from supplying
farmers providing data as part of their Farm Dairy Records.
Where measured data is normally available for a given item
in a given region, but it is not available for a given time
period, e.g., one particular month, it is estimated based
on the specific circumstances. Where there is uncertainty,
we have endeavoured to take a conservative approach.
For the Group’s consolidated reporting on employee data,
numbers are generally reported for all fixed-term and
permanent employees on a full-time equivalent (FTE) basis,
unless otherwise specified. Gender pay gap figures are
reported on a headcount basis, with pay compared on an
FTE basis. All data and analysis, other than turnover and
new hires, is as at 31 July 2025.
There are no significant seasonal variations in the employee
data reported. Casual staff contracted by Fonterra are
excluded from these figures as this represents only a very
small proportion of the regular workforce. Employees on
leave of absence are also excluded.
An assessment has been completed of the scope of
potential workers who are not employed by Fonterra, but
whose work may be controlled by the organisation across
categories such as contractors and third-party consultants.
Apart from health and safety metrics, non-employees
have been excluded from these figures due to limited
data availability.
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Significant changes during this year
There are no significant changes affecting our sustainability
reporting this year. The announcement of the sale of our
consumer and associated businesses has not impacted this
year’s sustainability reporting. A change in respect of the
boundary of our GHG emissions reporting to include Kotahi
Logistics LP (Kotahi), in our climate reporting is provided in
the Group Climate Statements.
Restatement policy
The Co-op’s policy is to recalculate base year and reported
data from subsequent years, when any of the following
situations arise:
–significant changes to our reporting boundaries, including
acquisitions or divestments, or when new or more reliable
sources of information are identified.
–significant changes to a calculation methodology.
–identification of a significant error or a number of errors
that are collectively significant.
In addition to this sustainability reporting section
of the Annual Report, our sustainability impacts
and topics are also disclosed in the following
elements of our reporting suite:
–Build on our sustainability position
–Governance & Statutory Disclosures
–Group Climate Statements
–Sustainability Reporting Appendix
–Milk Price Statement
–Modern Slavery Statement
For a comprehensive list of the GRI standards
referenced and the location of the corresponding
disclosures for FY25 see the appended
GRI Content Index.
Global Reporting Initiative Standards
Fonterra’s sustainability reporting is prepared with
reference to the Global Reporting Initiative (GRI), including
the Universal Standards, and those standards within the
GRI13, the Agriculture, Aquaculture and Fishing Sector
Standards and disclosures deemed material for reporting
in the Co-op’s 2024 updated materiality assessment.
The GRI13 topics are mapped to the nine material issues
we consider significant that guide our reporting. We have
reported on 13 of the 26 GRI13 topics. To avoid duplication
with our Group Climate Statements, topics related to GHG
emissions and energy use are not reported within this
sustainability reporting section. The topics not reported
1

are considered less significant for Fonterra and are
excluded from our reporting.
This is the ninth consecutive year Bureau Veritas has been
engaged to provide limited assurance of our sustainability
disclosures, as identified within the GRI Content Index.
This provides assurance that the report has been
prepared with reference to the GRI Standards and is a fair
representation of Fonterra’s sustainability performance.
In addition, this year KPMG has been engaged to provide
limited assurance that our GHG emissions have been
measured in accordance with the GHG Protocol.
Fonterra management and the Board receive a copy of
the assurance statement prior to release of the report.
The Fonterra Board approves release of the annual
reporting suite.
Barnes Farm, Southland
1 GRI - Sector Standard for Agriculture, Aquaculture, and Fishing: Topics
not reported to the GRI framework are: 13.1, 13.2, 13.4-13.6, 13.8, 13.12-13.14,
13.16-13.18, 13.21.
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Governance
Disclosures
Orla & Rajiv, Auckland
In this section
Our Board81
Our Management Team82
Corporate Governance Statement83
Remuneration Report98
Directors’ Disclosures110
Statutory Information112
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Our Board
Our Board of
Directors is
responsible for
leadership, direction
and oversight
of Fonterra, and is
accountable to our
farmer shareholders
for the overall
performance of
the Co-op.
The current members of the
Board are shown here with full
profiles available on our website.
Further information regarding
Board Committee membership
and responsibilities can be found
on page 87.
Peter McBride
Elected Director (Chairman)
Brent Goldsack
Elected Director
Bruce Hassall
Appointed Director
Andy Macfarlane
Elected Director
Cathy Quinn
Elected Director
Holly Kramer
Appointed Director
John Nicholls
Elected Director
Alistair Field
Appointed Director
Alison Watters
Elected Director
Information regarding changes to the Board during FY25 can be found on page 84.
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Our Management Team
The Fonterra
Management Team
(FMT) leads the
business to deliver
on our strategy,
bringing together a
depth of expertise
and capability to
strengthen our
position as a
provider of high-
value, innovative
dairy ingredients.
The current members of the
FMT are shown here with full
profiles available on our website.
Miles Hurrell
Chief Executive Officer
Anna Palairet
Chief Operating Officer
Mike Cronin
Managing Director, M&A and
Strategic Divestments
Matt Bolger
Managing Director,
Co-operative Affairs
Richard Allen
President, Global Ingredients
Kate Daly
Managing Director, People
and Culture
Teh-han Chow
President, Global Foodservice
& CEO Greater China
Andrew Murray
Chief Financial Officer
Komal Mistry-Mehta
Chief Innovation and
Brand Officer
The following changes have been made to the FMT since 1 August 2024:
LjEffective 12 March 2025, Teh-han Chow was appointed President, Global Foodservice, assuming responsibility for Foodservice operations across South East Asia,
Middle East Africa, and other markets, while continuing in the role of Chief Executive Officer, Greater China
1
.
LjEffective 12 March 2025, Richard Allen’s role transitioned to President, Global Ingredients, with an expanded remit that now includes the Co-operative’s Ingredients
businesses in Greater China and Middle East Africa
1
. He was previously appointed President, Global Markets Ingredients, effective 1 August 2024.
LjEffective 19 February 2025, René Dedoncker was named CEO-elect, Mainland Group and accordingly ceased to be a member of the FMT. Prior to this, René held the role
of Managing Director, Global Markets Consumer and Foodservice.
LjEffective 5 March 2025, Matt Bolger returned to the Co-operative as Managing Director, Co-operative Affairs, with Mike Cronin remaining on the FMT as Managing
Director, M&A and Strategic Divestments, focused on the proposed Consumer divestment process. Mike will remain with the Co-operative until the conclusion of
that process.
LjEffective 1 October 2024, Emma Parsons was appointed Chief Executive Officer, Kotahi Logistics LP, a joint venture between Fonterra and Silver Fern Farms.
1 Title changes for Teh-han and Richard were effective from 12 March 2025. The structural changes associated with these appointments came into effect 1 August 2025.
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Corporate Governance Statement
Our governance framework reflects Fonterra’s unique characteristics as a globally competitive
New Zealand based dairy co-operative, and is regularly reviewed and updated to remain appropriate
and effective, and to align with best practice and contemporary corporate governance trends.
This Corporate Governance Statement reports the extent to which Fonterra has followed the
recommendations of the NZX Corporate Governance Code dated 31 January 2025. It is current
as at 24 September 2025 and has been approved by the Board.
Principle 1: Ethical Standards
Code of ethics
Our Code of Business Conduct, The Way We Work, reflects the expectation that our Board of Directors
and employees globally should consistently maintain high standards of ethical behaviour, and act
responsibly and with integrity and transparency. We have an Ethical Behaviour Policy and Standard
that sets out our commitments, expectations, and requirements that support the Code.
All new employees are provided with a copy of the Code, along with our other key global policies.
An annual e-learning is assigned to senior leaders and those in sensitive roles to support the ongoing
awareness and understanding of the Global Policy Framework, including our commitments and
expectations regarding ethical behaviour.
In addition, the Board has adopted its own Code of Conduct, undertaking the responsibility of leading
by example and nurturing an environment where integrity and accountability are key.
The Way We Work, the Ethical Behaviour Policy and the Board Code of Conduct are available
on fonterra.com.
Fonterra’s Board of Directors, Co-operative Council and FMT
are committed to achieving the highest standards of corporate
governance to promote the success of our Co-operative and
build long-term value.
All employees are required to record actual or potential conflicts in the Fonterra Conflict of Interest
register, and mitigating actions must be approved by their managers. Fonterra also maintains a Gift
and Entertainment register, where employees must record all gifts given or received, above a nominal
level, including hospitality and entertainment with third parties. Employees are also required to declare
external governance appointments prior to accepting them (and new employees must declare existing
appointments), and in certain situations, such appointments will require approval from FMT.
We fund an independently administered whistleblowing hotline (The Way We Work Hotline), facilitated
by Deloitte. More information regarding this hotline can be found on page 18 of the Modern Slavery
Statement. The legislative requirements that must be followed in relation to whistleblowing (referred to
as Protected Disclosures) are outlined in Fonterra’s Ethical Behaviour Standard.
Employee Assistance Programme
We provide a free and confidential Employee Assistance Programme where employees and their
immediate family can seek guidance and counselling in any area of concern in their personal or
working life. It provides independent professional support to address issues such as anxiety, grief and
work-related stress. In 2025, services were extended to offer Rongoā Māori, a holistic and traditional
Māori healing system.
Securities Trading Policy
We have a Securities Trading Policy and Standard that detail the rules for trading in:
Ljshares, retail bonds, wholesale bonds, units, derivatives, and any other listed securities of Fonterra
or the Fonterra Shareholders’ Fund; and
Ljany swap contract, contract for difference, futures contract or options contract that settles to the
Fonterra Farmgate Milk Price.
The policy applies to all Directors, employees and contractors of the Fonterra group globally, as well as
members of the Co-operative Council and the Milk Price Panel, and is in addition to legislative prohibitions
on insider trading. Our Securities Trading Policy and Standard are available on fonterra.com.
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Principle 2: Board Composition and Performance
Board Charter
The Board Charter includes details about the Board’s role, responsibilities, obligations, composition and
procedures, and establishes the Board’s relationship with management. It is reviewed regularly and is
available on fonterra.com.
Board appointments
Fonterra’s Constitution provides for a maximum of nine Directors, comprising up to six Directors elected
by farmer shareholders (Elected Directors) and up to three Directors appointed by the Board (Appointed
Directors). Fonterra’s Board size reduced from a maximum of 11 Directors to nine following the conclusion
of Fonterra 2024 Annual Meeting.
The Board is committed to building its capabilities and maintaining a good balance of experience on
the Board. To achieve this, and the highest standards of governance, the Board has developed a list of
attributes that all Directors must be able to demonstrate and a list of skills that the Board believes are
required to effectively govern a complex, globally competitive New Zealand dairy co-operative with
diverse stakeholders. The attributes and skills lists are reviewed annually and updated as required.
Using the skills list, the Board develops a skills matrix by assessing the required weighting of each skill
given the Board’s current priorities and the external operating environment, against the aggregate skills
of the current Board. The skills matrix is used to identify the skills to be targeted each year as part of
the Elected Director election process and when selecting Appointed Directors. The attributes, skills list,
skills matrix and the year’s targeted skills are published annually as part of the Elected Director election
process, to assist potential candidates in assessing their suitability and to assist our farmer shareholders
when assessing the candidates put forward for election.
All Directors enter into written agreements establishing the terms of their appointment.
Elected Director selection process
The Elected Director selection process involves a three-member Independent Assessment Panel (IAP)
that assesses and recommends appropriate candidates to be put to our farmer shareholders for election.
The members of the IAP are independent of the Co-operative and are jointly appointed by the Board and
the Co-operative Council. In addition to the candidates assessed and recommended by the IAP, there is
a non-assessed candidate process where candidates can put themselves forward for election as Elected
Directors with the support of 35 shareholders.
Elected Directors are elected by postal ballot and online voting by our farmer shareholders. The voting
packs circulated to all farmer shareholders with voting entitlements include biographical information on
each candidate including relevant skills and experience. The Elected Director elections are overseen by
the Co-operative Council.
Director rotation
At each Annual Meeting, one-third of the Elected Directors retire from their position on the Board.
The Elected Directors who retire are those who have served the longest since their last election. Retiring
Elected Directors are eligible for re-election. Where the application of these rules would mean that an
Elected Director would serve a term exceeding three years, then that Director also retires from office.
Appointed Director selection process
Appointed Directors are selected to enable the Board to access the skills and competencies needed to
lead an enterprise of our size, global reach and complexity. They are independent and bring perspectives,
experience and skills to complement and enhance the attributes and skills provided by the Elected Directors.
The People, Culture and Safety Committee oversees the process for identifying and recommending
potential Appointed Directors. Prior to appointment by the Board, the Fonterra Shareholders’ Fund Board
is consulted. The Appointed Directors are ratified by farmer shareholders at the next Annual Meeting held
following their appointment.
Changes to Fonterra Board members
The following changes were made during the year ended 31 July 2025, all in November 2024:
LjChairman Peter McBride and Elected Director John Nicholls were re-elected to the Fonterra Board;
LjAppointed Director Alistair Field was appointed to the Board effective 1 November 2024, and this
appointment was ratified by shareholders at the 2024 Annual Meeting; and
LjElected Director Leonie Guiney and Appointed Director Clinton Dines retired from the Board.
In August 2025, it was announced that Elected Director Andy Macfarlane will retire from the Board
following the Annual Meeting in December 2025.
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Diversity
Diversity, equity, and inclusion (DEI) are critical to the success of our Co-operative. We’re committed
to an inclusive workplace where differences are valued and our people reflect the diverse communities
we serve.
Details of our DEI initiatives, including progress against key objectives and targets, are available in
our sustainability reporting. Our DEI Policy is published on fonterra.com.
There is value in having diversity on a board in order to capture a wider set of experiences, outlooks
and perspectives, and the Fonterra Board takes this into account when Appointing Directors.
Gender is just one aspect of diversity that is considered in respect of board composition. As the majority
of Directors are elected by our farmer shareholders through an independent process, the Board has
not adopted formal Board gender targets for FY25. The Board is, however, committed to addressing
the gender composition of the Board through the appointment of Appointed Directors and building
a pipeline of diverse Directors through the Fonterra Governance Development Programme.
The gender composition of the Board is shown in the table below.
TOTALMALEFEMALE
GENDER
DIVERSE
As at 31 July 20259
1
6
67%
3
33%
–
0%
As at 31 July 2024
10
2
6
60%
4
40%
–
0%
1 In November 2024 following the Annual Meeting, Fonterra’s Board maximum size reduced from 11 to nine directors.
2 As at 31 July 2024, there was a vacant Appointed Director position following the retirement of Mr Scott St John on 31 March 2024.
The gender composition of the FMT
1
is shown in the table below.
TOTALMALEFEMALE
GENDER
DIVERSE
As at 31 July 202596
67%
3
33%
–
0%
As at 31 July 20249
2
4
44%
5
56%
–
0%
1 Fonterra’s ‘Officers’ for the purposes of the NZX Listing Rules.
2 This includes Mr Simon Till, who held the position of acting Chief Financial Officer until 31 July 2024, and Ms Judith Swales, who
held the position of Chief Executive Officer Global Markets until 31 July 2024. It does not include the members of FMT appointed
as of 1 August 2024.
Ongoing training
Directors undertake an induction programme following their appointment to the Board. The areas
covered include:
Ljbusiness strategy and planning;
Ljhealth, safety and wellbeing, and risk management;
Ljan overview of key financial metrics to monitor business performance;
Ljan overview of material areas of our business, including through meetings with key executives; and
Ljour Constitution and governance framework.
Directors are expected to keep themselves informed of changes and trends in the business, Fonterra’s
environment and markets, and the economic, political, social and legal climate generally. Directors are
encouraged to attend external development and training courses and the Board holds training and
workshops on relevant subjects each year. The Board is also provided with regular strategic readings
and Directors are expected to keep up to date with governance trends. Board visits to our manufacturing
sites and global businesses occur regularly.
Performance assessment
Directors formally assess the performance of the Board, and the Board reviews each Committee’s
performance against its Charter. A regular programme of peer review of individual Directors occurs
as part of an ongoing Director development programme.
The Co-operative Council issues a Letter of Members’ Expectations to the Board setting out the
expectations of Co-op members. The Board and the Council’s independent assessment of Fonterra’s
performance against these expectations is published in the Council’s annual report. Further information
regarding the Council can be found on page 96.
The Board is responsible for reviewing the Chief Executive Officer’s performance.
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Director independence
The NZX Listing Rules require us to have at least two Independent Directors, defined in the NZX Listing
Rules as a Director who is not an employee of Fonterra and who has no disqualifying relationship.
A Director has a disqualifying relationship where they have a direct or indirect interest, position,
association or relationship that could reasonably influence, or reasonably be perceived to influence,
in a material way, the Director’s capacity to bring an independent view to decisions relating to the
Co-operative, to act in Fonterra’s best interests or to represent the interests of our shareholders
generally. A ruling issued by the NZ RegCo to Fonterra on the definition of “Disqualifying Relationship”
contains specific examples of what may give rise to a disqualifying relationship.
Elected Directors must be farmer shareholders under section 12.3 of the Constitution and are therefore
not considered independent. A waiver granted to Fonterra by the NZ RegCo permits Elected Directors to
be elected by farmer shareholders. Further information about the suite of Fonterra’s waivers and rulings
from the NZX Listing Rules is available on page 115 and on our website.
Appointed Directors cannot be shareholders and are expected to maintain independence for the length
of their term.
To assess the independence of Appointed Directors, a holistic assessment is undertaken against
the requirements of the Companies Act 1993 (Companies Act), the Fonterra Board Charter and the
NZX Corporate Governance Code.
Fonterra currently has three Appointed Directors. As at 31 July 2025, Bruce Hassall, Holly Kramer and
Alistair Field each did not have (and continue not to have) any disqualifying relationship in relation to
Fonterra and are therefore Independent Directors.
Our Constitution currently allows for up to three independent Appointed Directors, out of a maximum
of nine Board members (refer to page 84 for further information on changes to the Board size and
composition which took effect from November 2024). Accordingly, the Board does not consist of a
majority of independent directors.
Conflict management arrangements
There are conflict management arrangements in place to record any actual or potential conflicts
of interest of Directors, and Directors are expected to proactively advise the Co-operative of any
potential conflicts.
Division of roles
Under our Constitution the Chair must be an Elected Director, reflecting our structure as a co-operative
company, and is therefore not independent. Peter McBride, who is an Elected Director, is the Board-
elected Chair.
The Chair and Chief Executive Officer roles at Fonterra are not exercised by the same individual.
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COMMITTEE OR GROUPMEMBERSHIP AS AT 31 JULY 2025PURPOSE
Audit, Finance and Risk CommitteeBruce Hassall
1
(Chair)
Alistair Field
1
Brent Goldsack
Alison Watters
Cathy Quinn
To assist the Board in fulfilling its corporate governance responsibilities relating to Fonterra’s:
Ljfinancial management and internal control frameworks, financial reporting, climate risk reporting,
audit activities, capital markets matters, and funding activities; and
Ljmanagement and monitoring of the Group Risk Appetite Statement, and the Group Risk Appetite and
Tolerance position (noting that other Board Committees share oversight of some individual Group Risks).
Co-operative Relations CommitteeJohn Nicholls (Chair)
Brent Goldsack
Andy Macfarlane
Alison Watters
LjTo assess matters relating to New Zealand milk supply terms and aspects of milk pricing, and to assess
the rules relating to shareholding, and the risk management policy referred to in the Constitution
which manages the distribution of ownership in the Co-operative.
LjTo support strong and effective engagement between the Co-operative and farmer shareholders,
and assist the Board in the management of Fonterra’s relationships with key external stakeholders
and community initiatives.
LjTo review the Co-operative Principles periodically, seek to resolve supplier complaints before referral
to the Milk Commissioner, and undertake activities relating to the annual Fonterra Co-operative
Council elections.
Disclosure CommitteeAndy Macfarlane (Chair)
Bruce Hassall
1
Peter McBride
Cathy Quinn
John Nicholls
LjTo oversee Fonterra’s continuous disclosure obligations, including by considering the materiality
of information and making judgements on other information where it may not be material but its
disclosure would benefit the market.
LjTo review and approve the materials for release relating to the Interim and Annual Results and
Quarterly Business Updates (except for disclosures reviewed by other Board Committees).
Principle 3: Board Committees
We have a number of permanent Board Committees, and the membership and purpose of each
permanent Committee is detailed below. Additional non-permanent Committees are formed when
it is efficient or necessary to facilitate decision-making by providing for a sub-group of Directors to
focus on particular areas and to make recommendations to the Board.
Each permanent Committee is governed by a charter, which defines the scope and responsibilities of
that Committee and is regularly reviewed by the Board. These charters are available on fonterra.com.
In November 2024, the Strategic Review Committee became a permanent Committee to continue to
assist the Board and management in the consideration of strategic opportunities. In November 2024,
the Board formed one non-permanent Committee, the Due Diligence Committee, to assist the Board
and management in considering a potential initial public offering of its Consumer business as part of
an initial dual-track pathway.
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COMMITTEE OR GROUPMEMBERSHIP AS AT 31 JULY 2025PURPOSE
Milk Price PanelDavid Pilkington
2,3
(Chair)
Andrew Barlass
4,5
Bill Donaldson
4
Pat Duignan
2,6
Prof. Hamish Gow
2,6
Bruce Hassall
1
John Nicholls
Fred Ohlsson
2,4
LjTo provide assurances to the Board as to the governance of the Milk Price and the Milk Price Manual,
and the proper application of the Milk Price Principles.
LjThe Milk Price Panel does not determine the Farmgate Milk Price, as this is a decision reserved for
the Board.
People, Culture and Safety CommitteeHolly Kramer
1
(Chair)
Alistair Field
1

Peter McBride
Cathy Quinn
To assist the Board in fulfilling its corporate governance responsibilities relating to:
LjFonterra’s management of health, safety and wellbeing (including promoting a safe and healthy working
environment for all employees, contractors and members of the public as required);
Ljthe recruitment, retention, remuneration and development of Directors, executives and other
employees; and
Ljoptimising Fonterra’s culture to deliver high performance.
Strategic Review CommitteeCathy Quinn (Chair)
Brent Goldsack
Bruce Hassall
1
Holly Kramer
1
Peter McBride
To assist the Board in fulfilling its corporate governance responsibilities in relation to material
transactions or potential transactions that are identified by the Board, including any decision to:
Ljexit from a market, product or segment category by way of transaction;
Ljacquire any business; and
Ljundertake any significant change to the structure of the business by way of a transaction in order to
give effect to any material initiative or transaction being considered by Fonterra.
Sustainability and Innovation CommitteeAlison Watters (Chair)
Holly Kramer
1
Andy Macfarlane
Brent Goldsack
To assist the Board in fulfilling its corporate governance responsibilities relating to:
Ljreviewing and overseeing the sustainability aspects of Fonterra’s strategy, including reviewing the
Co-operative’s key sustainability metrics, commitments and targets and monitoring performance
against them; and
Ljreviewing Fonterra’s innovation and research and development strategy, including monitoring
performance against agreed metrics and reviewing the approach to Fonterra’s intellectual
property portfolio.
1 Independent Director.
2 Independent Member as defined in the Dairy Industry Restructuring Act 2001.
3 Approved by the Minister of Agriculture under subsection 150E(1)(b) of the Dairy Industry Restructuring Act 2001.
4 Nominated by the Co-operative Council.
5 Attended as non-voting observer.
6 Nominated by the Minister of Agriculture under subsection 150E(1)(a) of the Dairy Industry Restructuring Act 2001.
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Board and Committee attendance
BOARD
AUDIT, FINANCE AND
RISK COMMITTEE
CO-OPERATIVE
RELATIONS COMMITTEE
DISCLOSURE
COMMITTEEMILK PRICE PANEL
PEOPLE, CULTURE AND
SAFETY COMMITTEE
SUSTAINABILITY
AND INNOVATION
COMMITTEE
STRATEGIC REVIEW
COMMITTEE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
ELIGIBLE
TO AT TENDATTENDANCE
Clinton Dines
1
531111––––2111––
Brent Goldsack12127766––––––551614
Leonie Guiney
1
5411––––2222––––
Bruce Hassall121277––6476––1
2
11616
Holly Kramer12123
2
1––––––66541614
Andy Macfarlane12123
2
36666––––55––
Peter McBride12122
3
2––66––66––1614
John Nicholls1212–1
4
666655–––1
4
––
Cathy Quinn121277––66––661
2
11616
Alison Watters12127
5
766––––––55––
Alistair Field8763––––––431
2
1––
1 Retired in November 2024.
2 Eligible to attend the joint Audit, Finance and Risk Committee and Sustainability and Innovation Committee portion of the meeting to discuss the Group Climate Statements.
3 Eligible to attend as Chair of the Board.
4 Attended as an observer.
5 Eligible to attend one meeting as a member of the Sustainability and Innovation Committee (for the joint portion of the meeting to discuss the Group Climate Statements), then as a member of the Audit, Finance and Risk Committee from November 2024.
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Independent Directors – Audit, Finance and Risk Committee and People,
Culture and Safety Committee
The membership of the Audit, Finance and Risk Committee and the People, Culture and Safety
Committee (which fulfils the role of a remuneration committee) does not consist of a majority of
independent Appointed Directors.
Under a waiver granted by the NZ RegCo to Fonterra from NZX Listing Rule 2.13.2(c), the Audit, Finance
and Risk Committee is not required to comprise of a majority of Appointed Directors, subject to
conditions including a minimum of two independent Appointed Directors with one serving as Chair and a
maximum of five members in total.
Given the Board’s composition, there is no ability to have more than three independent Appointed
Directors as the majority of the positions are filled by Elected Directors (and as noted on page 86, the
Elected Directors are not considered independent). As such, it is difficult for us to appoint a majority of
Appointed Directors to these Committees without excluding Elected Directors or significantly increasing
the workload of the Appointed Directors.
We do not consider that this is a significant issue, as both of these Committees are chaired by
independent Appointed Directors.
Management only attends Audit, Finance and Risk Committee and People, Culture and Safety Committee
meetings at the invitation of the respective Committee.
Milk Price Panel
The Dairy Industry Restructuring Act 2001 (DIRA) requires that the Chair and a majority of the members
of the Milk Price Panel (Panel) are independent. In addition, the Dairy Industry Restructuring (Fonterra
Capital Restructuring) Amendment Act 2022 (DIRA Amendment Act) amended DIRA with effect from
1 June 2023 to, amongst other things:
Ljrequire that the independent Chair of the Panel have no “meaningful association” with Fonterra or
a shareholder, and be approved by the responsible Minister under DIRA; and
Ljincrease the number of members on the Panel nominated by the responsible Minister under DIRA
from one to two.
The Panel members as at 31 July 2025 are:
LjDavid Pilkington, independent Chair approved by the Minister;
LjProfessor Hamish Gow, independent Ministerial nominee;
LjPat Duignan, independent Ministerial nominee;
LjFred Ohlsson, independent Co-operative Council nominee;
LjAndrew Barlass, Co-operative Council non-voting observer
1
;
LjBill Donaldson, Co-operative Council nominee
1
;
LjJohn Nicholls, an Elected Director; and
LjBruce Hassall, an independent Appointed Director.
1 On 24 August 2024, Fonterra confirmed the appointment of Andrew Barlass to the Milk Price Panel as a Co-operative
Council non-voting observer from 1 September 2024, to be appointed as a full member from 1 September 2025, succeeding
Bill Donaldson.
Nominations committee
The People, Culture and Safety Committee fulfils the role of a nominations committee in respect of
Appointed Directors. The election and selection process for Elected Directors and Appointed Directors
is explained under Board Appointments on page 84.
Takeover offer
The Board does not believe that it is necessary to establish protocols for a takeover offer, given our
co-operative structure and the thresholds on share ownership in our Constitution.
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Principle 4: Reporting and Disclosure
Continuous disclosure
Fonterra’s Disclosure Policy and Standard facilitate compliance with the continuous disclosure obligations
in the NZX Listing Rules, and underpins our commitment to maintaining a well-informed market through
effective communication with investors and market participants. The Disclosure Policy and associated
Disclosure Standard are available on fonterra.com.
Fonterra and the Manager of the Fonterra Shareholders’ Fund have an arrangement to co-operate with
each other and take all steps reasonably required to ensure that information to be disclosed by either
of them under the listing rules of the NZX is disclosed simultaneously to the NZX Main Board.
Trading of Fonterra Co-operative Group Limited (FCG) shares migrated from the Fonterra Shareholders’
Market (FSM) to the NZX Main Board on 15 January 2025. The last day of trading of FCG shares on the
FSM was 14 January 2025.
The Fonterra Shareholders’ Fund was delisted from the ASX at the close of ASX trading on
27 February 2025.
Financial and non-financial reporting
Our Annual Report and supporting material disclose financial matters affecting the Co-operative in
a balanced, clear and objective manner, and includes the audited Financial Statements on page 119.
We also release financial performance information during the year at our Interim Results and Quarterly
Business Update announcements.
In addition, we also disclose non-financial information in our Annual Report and supporting material, which
includes consideration of environmental, social sustainability and governance factors and practices, and
how these support our strategic objectives. Specifically:
LjWe have continued to prepare sustainability disclosures (refer to page 43 of this report) with reference
to the Global Reporting Initiative (GRI) Standards, and we obtain independent assurance in relation to
these disclosures. We have adopted this internationally recognised reporting framework to help users
of our sustainability performance information compare our disclosed information with others.
LjAs a climate reporting entity under the New Zealand Financial Markets Conduct Act 2013, we have
released our FY25 Group Climate Statements (refer to page 177 of this report), prepared in compliance
with the Aotearoa New Zealand Climate Standards. Our first mandatory climate-related disclosures
were released in September 2024, following voluntary disclosures released in November 2023.
LjWe have released our sixth Modern Slavery Statement to meet the regulatory disclosure requirements
in the Australian Modern Slavery Act 2018. The Statement sets out the actions taken by Fonterra to
address modern slavery risks in its operations and supply chain during FY25.
Principle 5: Remuneration
The Remuneration Report on page 98 of this report details Fonterra’s remuneration framework, strategy,
and governance processes for its employees and Directors.
Principle 6: Risk Management
The Board, supported by the Audit, Finance and Risk Committee, has responsibility for overseeing the
implementation of our risk management framework.
Our risk management framework supports the implementation of risk management practices across the
Co-operative and is aligned with the three lines model. Our first line manages our risks and controls, and is
responsible for implementing risk management practices within their processes. Managers and individual
business units hold clear risk management responsibilities, including requirements to comply with external
obligations as well as our Global Policy framework. Our second line consists of the risk management
practices and assurance processes delivered by our Group and Specialist Functions, supporting a
consistent best-practice approach to risk management across the business. Third line independent
assurance and oversight is provided by a dedicated Internal Audit function, taking a risk-based approach
to the control environment, and providing reporting to the FMT and to the Board via the Audit, Finance
and Risk Committee.
Our Risk Appetite Statement specifies the amount of risk we are willing to take or accept in pursuit of
our strategy. It indicates the parameters within which we conduct our operations, providing guardrails
and baseline decision making guidance on our tolerance for uncertainty, and where we are willing to
accept risk as part of delivering on our strategy. It is further operationalised through our Global Policies,
Standards and other documents within the Global Policy framework.
Fonterra’s Global Risk Management Policy and Standard are aligned to the Australian/New Zealand Risk
Management Standard “AS/NZS ISO31000:2018 Risk management – Principles and Guideline”. They
outline our risk management principles and accountabilities, and set out the requirements for managing
risk across our business. They are designed to embed a positive risk culture and co-operative-wide risk
management capability, including establishing a consistent approach to identifying, analysing, evaluating,
controlling, treating, monitoring, and communicating our key risks.
Continuous monitoring of risk occurs as part of integrated business planning processes, specific technical
risk councils and audit outcomes, with a focus on the key risks faced globally in implementing our
business strategy. As part of its risk management responsibility, the Board and the Audit, Finance and
Risk Committee receive regular reports of Fonterra’s Group Risk Appetite position and the measures in
place to identify and manage the impact of emerging risks. The Board and the People, Culture and Safety
Committee also receive regular reports on the health, safety and wellbeing of our people as part of our
risk management framework.
The following table sets out Fonterra’s key risks and provides an overview of our mitigation activities
in FY25.
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KEY RISKRISK DESCRIPTIONRISK MITIGATIONS
Climate ChangeThe risk that Fonterra’ activities or those of its farmers are disrupted
due to an increased frequency and severity of both physical and
transitionary climate impacts.
Our emissions reduction targets and Climate Roadmap express the key climate activities across the
Co-operative’s value chain to help retain our position in emissions efficient pasture-based dairy.
Our climate risk programme and mandatory disclosure requirements actively identifies climate-related
risks and potential mitigations to build a resilient Co-operative.
Ongoing engagement with stakeholders on climate activities remains a priority.
Commodity PriceThe risk that the impact of product and commodity price volatility on
Fonterra’s portfolio, is not adequately identified, quantified, and then
leveraged for value creation, and/or appropriately managed.
Established governance framework including oversight from the Financial Risk Committee and the Audit,
Finance and Risk Committee.
Regular review of relevant policies, standards, and procedures to maintain a robust control framework.
Review and approval of annual exposure management plans and financial trading limits.
Regular review of foreign exchange and interest rate exposures and approval of the hedging plan.
Regular review of dairy and non-dairy portfolios, and ongoing market exposure assessments.
CybersecurityThe risk that the Co-operative’s ability to maintain the confidentiality,
integrity or availability of critical business assets and information
is compromised due to unauthorised access to systems and/or a
data breach.
Implementation of ongoing cyber programme to build defence by improving capability to govern, identify,
detect, protect, respond, and recover from cyber incidents.
Ongoing activity to improve cyber awareness and enable our staff as a key part of cyber defence.
Active engagement with key strategic partners, industry groups and government agencies to share threat
intelligence and work together to help keep Fonterra cyber safe.
Regular cybersecurity control reviews and assessments conducted to assess the environment and
manage cyber risk across people process and technology.
Environmental SustainabilityThe risk that the sustainability of the environment is adversely
impacted due to Fonterra’s activities or those of its farmers.
Resourcing plans to make progress against environmental targets. Refer to our sustainability reporting
for our sustainability goals and performance.
Proactive engagement with industry, iwi, government, non-governmental organisations, and regulators.
Tailored Farm Environment Plans in place to identify and manage on-farm environmental risks.
Food Safety and QualityThe risk that Fonterra supplies unsafe food (or food that is perceived
to be unsafe), or product that is of sub-standard quality.
Our Global Quality Management framework provides that the purchase, supply, production and release
of food is aligned with global regulatory standards as a minimum.
Our global third-party sourcing network undergoes specific food safety and quality audits by specialists
from Fonterra.
External global regulatory bodies undertake independent audits of our global management system, and
manufacturing and distribution footprint.
Internal global audit programme that supports and demonstrates compliance to external global
regulatory and certification programme requirements.
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KEY RISKRISK DESCRIPTIONRISK MITIGATIONS
Foreign Exchange and
Interest Rate
The risk that foreign exchange and/or interest rate exposures, are not
identified and/or appropriately managed.
Established governance framework including oversight from the Financial Risk Committee and the Audit,
Finance and Risk Committee.
Regular review of relevant policies, standards, and procedures to maintain a robust control framework.
Regular review of foreign exchange and interest rate exposures and approval of the hedging plans.
Health, Safety and WellbeingThe risk that Fonterra’s operations may expose employees, contractors,
or other stakeholders to serious physical and/or psychological harm due
to inadequate and/or ineffectively applied health and safety controls,
processes, or culture.
Regular detailed evaluations and verification of critical risks and employee safety, prioritising
hazard elimination, and the presence of direct/engineered controls where elimination is not
reasonably practicable.
Engaging employees in making work safe through proactive risk management and ongoing training
and dialogue.
Addressing physical and psychosocial health risks through comprehensive programmes and balancing
the nature of work with health.
Robust learning reviews using digital systems and tools to document, analyse, and act on incidents and
feedback, promoting transparency and accountability, and worker involvement in understanding events.
Setting goals and reporting and measuring events in an enterprise-wide management system to drive
action and delivery priorities.
Exceeding regulatory compliance and maintaining open communication with all stakeholders to enhance
safety standards.
Clear strategic plan for ongoing improvements in Health, Safety and Wellbeing systems and approaches.
Information TechnologyThe risk that Fonterra fails to establish, maintain and safeguard
an appropriate information technology (IT) and data management
framework, that maintains the confidentiality, integrity and availability
of Fonterra’s data, systems and supply chain.
Ongoing implementation of risk reduction programmes to improve stability, reliability and resilience of
our IT landscape.
Multi-year programme to replace old and complex hardware and software systems.
Continued expansion of the Data and Artificial Intelligence (AI) programme to improve management and
protection of data, and leverage AI technologies as these develop.
InnovationInability to innovate effectively to respond to market trends
and disruptions.
Insights and outputs from strategic development and implementation processes feed directly through
to integrated innovation forums.
Targeted use of a spectrum of innovation vehicles (e.g., Fonterra’s Ki Tua investment fund, internal
research and development expertise, third party partners, research institutions and government)
to identify, develop, and/or acquire relevant innovations, technologies, and research and
development capabilities.
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KEY RISKRISK DESCRIPTIONRISK MITIGATIONS
Legal and ComplianceThe risk that Fonterra fails to manage or respond to changes in legal
and Compliance obligations, within the markets in which it operates.
Annual Employee Policy Commitment (including certification of compliance with Fonterra Legal and
Compliance policies and standards).
Regular legal and compliance training (both broad based and market/function specific), accessible legal
and compliance guidance, and reporting systems and processes.
Support and advice from internal Legal, Regulatory and Trade Strategy teams, supplemented by specialist
external support as required.
Licence to OperateThe risk that Fonterra’s licence to operate is impeded due to the failure
to adequately consider and respond to societal impacts, stakeholder
interests, and/or legal and regulatory obligations.
Fonterra’s Doing Good Together Programme delivers community programmes across three pillars
addressing food insecurity, community led nature initiatives, and mental health and wellbeing in
rural communities.
Active stakeholder engagement programme in New Zealand and key international markets.
Achievement of key environmental and other relevant targets.
Continuous oversight and escalation processes relating to resource consents.
Liquidity and FundingThe risk that Fonterra is unable to access sufficient funds to meet
financial obligations, and/or insufficient financial flexibility to take
advantage of opportunities.
Established financial assurance framework including oversight from the Financial Risk Committee, and the
Audit, Finance, and Risk Committee.
Active management of debt, working capital, and cashflow forecasting.
Regular review of relevant policies, standards, and procedures to maintain a robust control framework.
Market Access / GeopoliticalThe risk that Fonterra’s ability to access global markets is impeded due
to supply chain disruption, geopolitical tensions, changing regulations
and/or protectionist trade barriers across our global supply chain.
Trade and regulatory advocacy, including through international government/industry engagement,
insights and intelligence to inform business decisions and strategy.
Scenario planning and modelling, and development of bespoke action plans, in relation to specific risks.
Annual reporting on market concentration risk.
Active centralised portfolio management with product portfolio plans that capture a diverse global
demand pool.
Multimarket, diverse product and channel offerings with specific strategies in place to support.
Milk SupplyThe risk that Fonterra is unable to retain milk supply due to disruption
(e.g. biosecurity/weather event), competitor activity, changes in farm
productivity, unfavourable returns and/or adverse regulatory settings.
Delivering strategic milestones and strong financial performance to provide sustainable value for suppliers
and farmer shareholders.
Retaining, growing and winning milk supply while supporting farmers in producing high-quality
sustainable milk and building efficient, resilient farming businesses.
Flexible capital structure, farmer-focused price risk and cashflow management and share investment tools
Engaging and supporting farmers to attract the next generation to help keep land in dairy.
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KEY RISKRISK DESCRIPTIONRISK MITIGATIONS
PeopleThe risk that Fonterra is unable to identify, attract, and maintain
required people capability due to inadequate leadership,
culture, development, union relationships, and/or changes in the
external market.
Continued delivery of programmes to strengthen organisational culture, talent, leadership development, future
capabilities, and strategic workforce planning.
Clear roadmap to simplify People and Culture (P&C) processes and technology systems.
Leveraging the P&C operating model to improve strategic business partnering and support high priority
initiative deployment.
Continued provision of tools and training to upskill people leaders, improve decision making, and
leadership effectiveness.
Embedding diversity, equity and inclusion across all relevant facets of our high priority initiatives.
Strategic DecisionThe risk that Fonterra’s strategy does not align to the purpose and
aspirations of the Co-operative and its farmers, and the realities of
its organisational context, due to significant changes in its operating
environment and/or inadequate inputs and assumptions in decision-
making processes.
Organisational strategy system generates continuous insights and provides regular reviews of the beliefs
and assumptions which underpin the strategy for consideration by FMT and the Board.
Strategic Execution The risk that execution of Fonterra’s strategy is impeded
due to the failure to adapt to changes in the Co-operative’s
operating environment.
Strategic deployment milestones and decision points are integrated into management systems and
business planning.
Annual review and reconciliation of business activity and results against strategic expectations
and targets.
Supply Chain and
Manufacturing
The risk that Fonterra’s ability to maintain or operate the assets within
its end to end supply chain is disrupted, delayed or reduced.
Reliable and efficient collection, treatment and distribution of milk.
Strong focus on global supply chain management: implementing resilience strategies to mitigate impacts of
global shipping and local supply chain disruption.
Established, robust business continuity plans to address identified manufacturing and supply chain risks.
Third-party supplier risk assessment process, and category sourcing strategies.
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Principle 7: Auditors
External auditor framework
The Audit, Finance and Risk Committee is responsible for making recommendations to the Board
regarding the appointment of the external auditor. It reviews the independence of the auditor, external
audit fees, terms of engagement and the annual audit plan.
The external auditor is appointed by our farmer shareholders at the Annual Meeting. KPMG has been
appointed as Fonterra’s external auditor for six consecutive years, and the fees paid to KPMG for FY25
are detailed in Note 3 of the Financial Statements (page 141 of this report). The lead external audit
partner must be rotated at least every five years, and the most recent partner rotation began in FY25.
Our Group Audit Independence Policy and Standard enable the auditor to carry out its statutory audit role
in a manner where its independence is not impaired or could be perceived to be impaired. The Standard
sets out the types of services that the auditor may undertake, those the auditor may only undertake with
the approval of the Audit, Finance and Risk Committee, and those that are not permitted.
All non-audit services to be undertaken by the auditor require pre-approval by the Chief Financial Officer
or the Director Group Finance. Regardless of the nature of the services proposed, any engagements
exceeding a total of NZD200,000 must be approved by the Audit, Finance and Risk Committee.
The external auditor attends all Audit, Finance and Risk Committee meetings, and meets with the
Committee without Fonterra management at least twice a year. The Chair of the Committee also
communicates regularly with the external auditor.
Annual Meeting
The external auditor attends our Annual Meeting and is available to answer questions from farmer
shareholders in relation to the audit.
Internal audit
Our Internal Audit function provides independent and objective assurance to the Audit, Finance and Risk
Committee and management on the adequacy of risk management, control and governance processes.
Our internal audit approach is based on the principle that Fonterra’s management is responsible
for implementing, operating, and monitoring the internal controls to manage risk and achieve
business objectives.
Fonterra’s Internal Audit team is responsible for:
Ljdelivering a reasonable degree of assurance, as determined by the Audit, Finance and Risk Committee,
over business risk and the effectiveness of internal controls;
Ljassisting the business with special reviews or investigations; and
Ljcomplying with the internal audit methodology.
The appointment and removal of the Chief Internal Auditor (CIA) is subject to the approval of the Audit,
Finance and Risk Committee. The CIA is responsible for developing the annual internal audit plan and is
accountable for its implementation. The Audit, Finance and Risk Committee endorses the internal audit
plan and regularly monitors the progress of its implementation.
Principle 8: Shareholder Rights and Relations
Website and disclosure
Our website (fonterra.com) provides investors and interested stakeholders access to Fonterra’s financial,
operational, and key corporate governance information.
Information regarding our performance, annual and half-year financial results, Director changes, and other
significant matters, is disclosed to the market through the NZX in accordance with relevant laws and
listing rules. All media and market releases are also available on fonterra.com.
Co-operative Council
One of the Board’s most important relationships is with the Co-operative Council, a national
representative body of Fonterra farmers that operates independently within Fonterra’s organisational
framework. The Council is established under the Constitution and its role is to support shareholders’
democratic control of Fonterra and to represent and seek to protect Co-op members’ interests.
As at 31 July 2025, the Council consisted of 25 elected Councillors from each of the 25 wards across
New Zealand, and two appointed Councillors.
The Council publishes an annual report, outlining its activities and which includes separate assessments
by the Board and the Council of the extent to which Co-op members’ expectations are being met.
The Council’s annual report is emailed to all members of the Co-operative and made available on the
Farm Source website.
The Council, Board and Fonterra’s management have a working interface document which sets out
the principles to facilitate their working relationship and the way operational issues will be addressed.
The working interface document is available on the Farm Source website.
Engaging with our farmer shareholders
There’s a sense of pride, belonging and connection that comes with being part of a co-operative, and
fostering that is an important part of what we do.
We are looking to continuously improve the way we engage with our farmer shareholders to keep
them well informed about relevant topics – including where we are at and where we are headed as
a Co-operative.
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The teams that are involved with refining and implementing our farmer engagement plan oversee a range
of communications channels. This includes the Farm Source website, which allows farmer shareholders,
and their authorised employees, contractors and business partners to access information and tools across
key areas such as milk production and quality, online statements and price risk management services.
The My Co-op app delivers up-to-date news and information, including Milk Price announcements,
upcoming events, Farm Source Rewards balances, and updates from the Chair and Chief Executive Officer.
Meanwhile, the On Farm app provides daily milk production and quality information, comparisons against
last season volumes, tanker movements, and summary reports of key milk performance information for
the past 30 days.
Local Farm Source teams regularly contact farmers in their area, while the Farmer Support Team is also
available 24/7 on 0800 65 65 68.
We arrange face-to-face and online meetings throughout the year, so we can have conversations
with farmer shareholders as well as other key groups, such as sharemilkers, contract milkers and
rural professionals.
We also seek feedback in a variety of ways, including surveys and in-person focus groups. A new
relationship survey was introduced in December 2024 to gain deeper insights into what drives farmers’
feelings about Fonterra. This will be run annually, with the feedback helping us shape our initiatives and
approach to better support farmers and strengthen the relationship they have with their Co-operative.
Regular emails from the Chair, Chief Executive Officer, Group Director Farm Source and Regional Heads
are also used to keep our farmers informed, and we issue a monthly Global Dairy Update to provide an
overview of the global dairy market and our performance.
Annual and Special Meetings
Our Annual Meeting, held at a different venue around New Zealand each year, is an opportunity
to communicate directly with our farmer shareholders. The meetings are designed to encourage
participation from our farmers, with appropriate time provided for farmer shareholders to raise issues
or ask questions from the floor. The Chief Executive Officer attends the Annual Meeting.
Our Constitution describes the process for a farmer shareholder to raise a proposal for discussion or
resolution at the next meeting of farmer shareholders at which the farmer shareholder is entitled to vote.
Fonterra endeavours to send notices of annual or special meetings to farmer shareholders at least
20 working days prior to the relevant meeting. Due to the need to consider and include the details of
shareholder proposals received by Fonterra this is not always possible, however at a minimum, notices are
sent to farmer shareholders and published on fonterra.com at least 10 working days before the meeting
in line with Fonterra’s Constitution and the Companies Act. For Fonterra’s 2024 Annual Meeting held on
14 November 2024, the notice of meeting was made available on 21 October 2024.
Our 2025 Annual Meeting will be hybrid, allowing farmer shareholders to join either online or in person.
Voting
Shareholders have the right to vote on major transactions (as defined in the Companies Act) as well as
other major decisions that may change the nature of Fonterra as prescribed by the NZX Listing Rules. In
particular, NZX Listing Rule 5.1.1 restricts Fonterra from entering into any transaction (or series of related
transactions) which would significantly change, indirectly or directly, the nature of Fonterra’s business or
involve a gross value above 50% of the average market capitalisation of Fonterra, unless the transaction(s)
is approved by (or is conditional on the approval of) Fonterra’s shareholders.
In accordance with the co-operative nature of Fonterra, voting is based on the quantity of milk solids
supplied to Fonterra, backed by shares, and is not on the principle of one vote per share.
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Remuneration report
Dear Shareholders
On behalf of the Board, I am pleased to present Fonterra’s remuneration report for
the financial year ended 31 July 2025.
FY25 performance and remuneration outcomes
The Board acknowledges the great performance delivered over the past year and formally recognises the
contributions of the FMT, and their respective teams across the Co-operative.
Short-term Incentive (STI)
Our senior leaders’ STI is aimed at delivering exceptional results against our annual goals, which are aligned
with our strategic choices. For FY25 we further strengthened our focus on Health, Safety and Wellbeing
(HSW) with the introduction of an additional measure linked to our Global HSW plan. We also broadened
the definition of Serious Harm to include a wider range of injuries and to include contractors, aligning with
global standards. We introduced a measure linked to milk supply, recognising the importance of securing
milk for the long-term performance of the Co-op. The weighting of the Group Return on Capital (ROC)
and Farmgate Milk Price (FGMP) measures in the STI plan were also increased, further strengthening
alignment of remuneration outcomes with those of our farmer shareholders.
Positive outcomes were achieved across seven of eight measures including Group ROC and FGMP, both
of which support alignment with our farmer shareholders. We saw significant progress through FY25
on our customer measure of delivered in full, on time (DIFOT), further building on improvements made
through FY24. Continued positive progress has also been made against our Sustainability measure of
Greenhouse Gas Emissions (GHG), and Serious Harm. Good performance was achieved across our milk
supply and Innovation measures. The resulting achievement for the FY25 STI plan is 117.6%. This outcome
reflects a very strong year of performance across the Co-operative’s annual goals, particularly in Group
ROC and FGMP, which contribute significantly to the STI.
The Chair of the Board reviews the CEO’s performance each year, and recommends to the Board the STI
payment to be made to the CEO. The CEO’s FY25 STI outcome as approved by the Board is provided in
the CEO Remuneration section of this Report.
Message from the People, Culture & Safety
Committee Chair — Holly Kramer
Long-term Incentive (LTI)
The LTI plan introduced in FY23, called Alignment Rights, is aimed at rewarding the delivery of sustainable
outcomes for all shareholders. The third grant of Alignment Rights was made in FY25 to senior leaders,
further supporting attraction and retention and alignment to farmer outcomes.
Fifty percent of the value of Alignment Rights is based on the performance of a Co-operative share on the
Fonterra Shareholders’ Market (FSM) over a six-year period (called Co-op Unit).
The remaining 50% is based on the change in on-farm profitability per hectare over the six-year period as
measured through the DairyNZ Economic Survey (called Farm Unit).
The value of the Co-op Unit as at 31 July 2025, is $4.35. This is an increase for all three grants made to
date with $2.82 being the value for the FY23 grant, $2.38 for the FY24 grant, and $2.66 for the FY25 grant.
Participants of the FY23 and FY24 grants received dividend equivalent payments to the value of the FY24
interim and final dividends provided to farmer shareholders resulting in an annualised total shareholder
return of 29.8% for the FY23 grant and 48.3% for the FY24 grant.
The value of the Farm Unit as at 31 July 2025, is $3,337. This is an increase from $2,700 for the FY23
grant, and a small decrease for both the FY24 and FY25 grants from $3,365 and $3,454 respectively.
No payments are made to participants relating to the Farm Unit until the end of the performance
period (generally six years).
Looking ahead
We have made a number of changes to our STI plan for FY26 with the objective of driving the right
outcomes for the Co-operative and continuing to align with our long-term strategy. Our approach to
measuring HSW performance continues to evolve, as we progress against our Global HSW plan. Whilst
our HSW measures remain focused on minimising Serious Harm, this will be supported with a focus on
the actions that significantly reduce critical risk exposure. Additionally, we are sharpening our focus on
Scope 3 on-farm emissions, by introducing an emissions measure linked to achievement of the 2030
on-farm emissions intensity reduction target, further supporting alignment with the goals of our farmer
shareholders. Recognising the significant importance of Food Quality we are introducing a Food Quality
measure for FY26.
In FY26, we will continue to maintain our LTI plan and make the fourth grant of Alignment Rights to
our senior leaders, further supporting attraction and retention and alignment to farmer outcomes.
Holly Kramer
People, Culture & Safety Committee Chair
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Fonterra’s
remuneration strategy
has been designed to
align to and support
our purpose, values,
and the delivery
of our strategic
choices. These are
the foundation of the
Co-operative and the
lens through which all
behaviours, decisions
and choices are made.
Our
values
Our strategic
choices
Our remuneration
principles
Align employees with
sustainable prosperity for
farmers via Co-op returns
and Farmgate Milk Price;
and strength and value of
the Co-op
Reward collaboration to
deliver the most value
from each litre of milk for
dollar of capital invested
Support Fonterra values
Attract and retain key
experience, expertise
and knowledge
Reflect individual
contribution
Good Together
Better Every Day
Every Drop Counts
Deliver the
strongest farmer
offering
Unleash our
Ingredients engine
Keep up the
momentum in
Foodservice
Invest in operations
for the future
Build on our
sustainability
position
Innovate to drive
our advantage
Remuneration
strategy
Our
purpose
Our Co-operative,
Empowering people
To create goodness
for generations.
You, me, us together
Tātou, tātou
Employee remuneration
Be simple and transparent
Have robust governance
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Remuneration framework FY25
The details included in this section relate to the remuneration framework in place for FY25.
Employee remuneration
The Co-operative’s remuneration framework is designed to attract and retain talent, and motivate and
recognise the role our people play in the success of Fonterra. It is aimed at supporting our strategy,
purpose, and values.
Fonterra’s remuneration framework for salaried staff includes base salary, benefits (KiwiSaver,
superannuation and insurance where applicable), and variable remuneration (incentives).
Fonterra’s remuneration packages are benchmarked against comparable companies in relevant markets,
using information obtained from independent remuneration consultants. Adjustments to remuneration
packages may occur on a cyclical basis, such as an annual salary review, or on an as-needed basis, for
example to recognise promotions, or address internal relativity (including gender pay).
The framework is designed to take into account budget targets and restraints, market conditions,
internal equity (including gender pay), and governance factors such as local legislation, as well as
individual performance.
Enterprise Leader remuneration
Senior employees, who are deemed to have the greatest ability to have a long-term impact on the
Co-operative’s performance, are defined as Enterprise Leaders. This group generally includes the
CEO, FMT, and their senior direct reports.
The components of the remuneration package of Enterprise Leaders are set out in the table below and
includes the LTI plan called Alignment Rights introduced in FY23.
The remuneration package and any incentive payments made following the completion of the financial
year, to the CEO and eligible FMT, are approved by the People, Culture and Safety Committee (PCSC)
(and in the case of the CEO, the Board) at its discretion. The PCSC retains absolute discretion in respect
of payments for all incentive schemes.
Total Remuneration
FIXED REMUNERATIONSHORT-TERM INCENTIVEALIGNMENT RIGHTS
How it worksConsists of base salary and benefits
(KiwiSaver, superannuation and
insurance where applicable).
Reviewed annually based on
performance and behaviours.
Set based on capability, experience,
performance, internal relativity
(including gender pay), and external
relativity with the applicable country
or region.
Calculated based on achievement against a Fonterra Group Scorecard which
aligns to our strategic choices and key people measures. It is comprised of
financial and non- financial ESG measures. An individual multiplier (in the range
of 0.8x to 1.2x) is applied to the STI outcome for the CEO and each individual
FMT member to recognise and reward individual performance and contribution.
Achievement is determined over a one- year performance period (1 August – 31
July, aligned to Fonterra’s financial year).
The Group Scorecard is capped at 150% of on-target opportunity.
CEO on-target opportunity is 72% of Base Salary.
Eligible FMT and other Enterprise Leaders on-target opportunity is between
25% and 60% of Base Salary.
The value of the Alignment Rights will increase or decrease in value
relative to sustainable farmer prosperity and Co-operative value over a
six-year period.
50% of the Alignment Rights is based on the performance of a Co-
operative share on the Fonterra Shareholders’ Market (FSM) over the
six-year period. The remaining 50% is based on the change in on-farm
profitability per hectare over the six-year period as measured through
the DairyNZ Economic Survey.
CEO grant value is 48% of Base Salary.
Eligible FMT and other Enterprise Leaders grant value is between 20%
and 40% of Base Salary.
What it doesAttracts and retains key talent in the
markets in which Fonterra operates.
Aligns Enterprise Leaders on delivering exceptional results over both the short
and long term for farmer shareholders.
Aligns Enterprise Leaders with the financial interests of Fonterra’s
farmer shareholders.
Benchmarking
& market
positioning
The remuneration packages of Enterprise Leaders are benchmarked against the external market using comparable companies in the applicable country or region.
Benchmarking of the CEO and FMT’s remuneration packages is conducted using an independent remuneration consultant appointed by the PCSC and is based on a comparator group of
companies similar in size, complexity and operational scope. Fonterra aims to pay Fixed Remuneration and Total Remuneration of the CEO and FMT in the range of the 50th to 65th percentile of
the comparator benchmark peer group.
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Short-term Incentive FY25
The STI is a critical component of our remuneration framework. It is aimed at motivating, aligning and
rewarding performance over a 12-month business performance cycle and comprises financial and non-
financial ESG measures.
The measures included in the scheme align with Fonterra’s strategic choices, as well as key people-related
priorities. Each year these measures are reviewed to align with our longer-term strategic targets.
The FY25 measures include:
LjGroup Return on Capital
LjFarmgate Milk Price
LjMilk Supply
LjDelivery in full, on time
LjGreenhouse gas emissions
LjValue from innovation
LjHealth and safety
Achievement against these for FY25 is provided in the CEO Remuneration section of this report.
Long-term Incentive FY25
The LTI called Alignment Rights was introduced in FY23 and is aimed at aligning the financial interests of
Fonterra’s Enterprise Leaders with those of the Co-operative’s farmer shareholders.
Those eligible for Alignment Rights are our Enterprise Leaders which includes the CEO, FMT and their
senior direct reports who are deemed to have the greatest ability to have a long-term impact on the Co-
operative’s performance.
Alignment Rights are comprised of two separate measures, each equally weighted at 50%. The first
measure is called the Co-op Unit and the second is the Farm Unit. Further detail on these respective
measures and the rationale for inclusion in the scheme is provided in the table below.
The performance period of the plan is typically six years. After completion of the performance period,
a cash payment will be made based on the performance of the Co-op Unit and the Farm Unit. The first
grant of Alignment Rights, including the value of the Co-op Unit and Farm Unit at grant, was approved by
the PCSC and awarded in FY23. The second grant of Alignment Rights was approved by the PCSC and
awarded in FY24, and the third grant was approved and awarded in FY25.
Prior to the introduction of Alignment Rights, the CEO and certain members of the FMT participated in
the Executive Incentive Plan (EIP). This plan included a deferred component payable three years after
grant subject to a performance hurdle. The last grant made under the EIP was for FY22 performance.
Recognising the longer performance period of six years under the Alignment Rights plan, those
transitioning from the EIP plan (including the CEO) have shorter performance periods for the first two
grants. These shorter performance periods are no less than four years.
MEASUREWEIGHTINGFURTHER DETAIL AND RATIONALE FOR MEASURE
Co-op Unit50%The value of the Co-op Unit will go up or down based on the performance of a Co-operative share.
Dividend equivalent payments and other cash distributions will be made during the performance period to replicate the returns received for a Co-operative share.
The Co-op Unit is designed to replicate the returns a farmer shareholder receives and incentivises Enterprise Leaders to focus on the long-term performance of a
Co-operative share.
Farm Unit50%The Farm Unit is based on the three year average of on-farm profitability per hectare as measured through the DairyNZ Economic Survey. The value of the Farm Unit
will go up or down based on on-farm profitability.
No dividend equivalent payments or other cash distributions are made on the Farm Unit.
The Farm Unit is designed to replicate the change in on-farm profitability over the performance period and incentivises Enterprise Leaders to focus on those factors
that influence on-farm profitability for our farmer shareholders.
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Chief Executive Officer remuneration
The following section of the remuneration report sets out the remuneration structure, pay
mix, and remuneration earned and received by the CEO for FY25.
Fixed Remuneration
Short-term Incentive
Long-term Incentive
CEO remuneration components and performance period
The diagram below sets out the remuneration structure and delivery timing for the CEO. The same
performance periods apply for all Enterprise Leaders.
CEO pay-mix
The remuneration pay-mix graph below shows the percentage of each remuneration element
that makes up the CEO’s on-target remuneration opportunity for FY25.
1 Eligible for dividend equivalent payments and other cash distributions during the performance period. These would be
paid annually to support alignment through the performance period.
2 Recognising the longer performance period of six years under the Alignment Rights plan, those transitioning from the EIP
plan (including the CEO) have shorter performance periods for the first two grants. The first grant made to the CEO in
FY23 comprised two equally weighted tranches. The first tranche had a performance period of four years, and the second
tranche had a performance period of five years. The second grant made to the CEO in FY24 comprised of two equally
weighted tranches. The first tranche had a performance period of five years, and the second tranche had a performance
period of six years. The performance period for the first tranche of the first grant is due to end in FY27.
46%32%22%
Fixed
Remuneration
Short-term
Incentive
Long-term
Incentive
1
Base
salary
KiwiSaver
Year 1
Year 4
Year 3Year 6Year 2Year 5
Alignment Rights with performance
period of six years
2
Assessed
over a
1 year
performance
period
Total CEO remuneration paid
Total remuneration paid reflects the remuneration in the period it is received, rather than the performance
period to which payment relates.
Miles Hurrell has held the role of CEO for the full financial year.
His annual salary as at 31 July 2025 is $2,463,818. The pay for performance component paid in FY25
includes the FY24 STI, the deferred component of the FY21 EIP which was subject to a performance
hurdle being met, and the dividend equivalent payments made on the Co-op Units of the FY23 and
FY24 Alignment Rights grants.
Further information on Alignment Rights can be found on page 101 of this report. The remuneration
earned by Mr Hurrell in FY25 for the Alignment Rights plan is set out in the next page.
The total remuneration received by Mr Hurrell in FY25 was $6,108,005 as shown in the table below.
FIXED REMUNERATIONPAY FOR PERFORMANCE
TOTAL
REMUNERATION
PAID IN FY25
SalaryBenefits
1
Short-term Incentives
2
Long-term Incentives
3
$2,486,780$177,903$1,947,441$1,495,881$6,108,005
1 Employee Superannuation contribution on salary, Short-term and Long-term Incentive.
2 The value of the Short-term Incentive represents the FY24 Short-term Incentive Plan.
3 The value of the Long-term Incentive represents the deferred component of the FY21 EIP which was subject to a performance
hurdle being met and the dividend equivalent payments on the Co-op Units of the Alignment Rights granted 1 October 2022 and
1 October 2023.
Total CEO remuneration earned
Total remuneration earned aligns remuneration outcomes with the performance period in which the
remuneration is earned, providing what Fonterra believes is a more transparent indication of pay
for performance.
The FY25 STI achievement for Mr Hurrell was $2,503,396, based on a Group Scorecard outcome of
117.6% and an individual multiplier of 1.2. Achievement of the Group Scorecard measures is provided
on the next page of this report.
Alignment Rights were awarded to Mr Hurrell during FY25 at a total value at allocation of $1,182,633
(48% of Base Salary), which will be recognised over the service period to 30 September 2027 (adjusted
for movements in fair value). The payment date is 30 September 2030. The amounts in the table over
the next page represent the fair value of the pro-rata amounts earned by Mr Hurrell in FY25.
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The number of Alignment Rights granted to Mr Hurrell during FY25 is provided on the next page.
The deferred component of the FY22 EIP is subject to a performance hurdle of FY25 Group ROC
over Milk Price Weighted Average Cost of Capital. Based on achievement against the performance
hurdle, maximum payment of $1,353,780 was achieved. This amount has been fully recognised in prior
Remuneration Reports within the CEO remuneration earned table, therefore this value is not included
below. No further awards have been made under the EIP.
Fonterra believes its reporting approach to total CEO remuneration earned provides the right balance
of transparency and disclosure while accurately reflecting the outcomes for FY25.
FY25
Fixed remuneration
Salary$2,486,780
KiwiSaver on salary
1
$74,603
Pay for performance
Short-term Incentive$2,503,396
Long-term Incentive
Alignment Rights granted payable as cash in future periods
2
$1,584,625
Dividend Equivalent Payments and cash distributions
3
$386,164
KiwiSaver on Incentives
1
$134,226
Total remuneration earned in FY25 $7,169,794
1 Employer Superannuation contribution on salary, Short-term and Long-term Incentive.
2 The service period for the FY23, FY24 and FY25 grants ends on 30 September 2025, 30 September 2026 and 30 September
2027 respectively. Amounts recognised in the above table represent the pro-rata amounts earned in FY25, adjusted for
movements in fair value of all units. Further information on grants – including grant date, number of units and payment dates
can be found on page 104.
3 Dividend equivalent payments and cash distributions on Co-op Units will be made on an annual basis during the performance
period, based on the returns received by FSM shareholders. No dividend payments or cash distributions are made on Farm Units.
Amount above is exclusive of the final dividend for FY25 which will appear in FY26 earnings.
Group Scorecard achievement
Achievement against the FY25 STI measures is provided in the below table. This Scorecard
achievement applies to the CEO, FMT and their senior direct reports.
PILLARMEASURESSTI WEIGHTINGWEIGHTED OUTCOME
FinancialGroup ROC30%37.5%
FGMP30%37.5%
CustomerDIFOT10%10.8%
SustainabilityGHG Emissions10%11.3%
InnovationValue from Innovation10%10.3%
PeopleHealth and Safety10%10.0%
TOTAL SCORECARD OUTCOME (before multiplier)117.3%
Milk Supply Multiplier1.0025
TOTAL SCORECARD OUTCOME (after multiplier)
1
117.6%
1 The figures in this table may not sum to the total due to rounding.
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Co-op Unit
GR ANT DATEPAYMENT DATEBALANCE AS AT 31 JULY 2024UNITS GRANTED DURING FY25UNITS PAID DURING FY25BALANCE AS AT 31 JULY 2025
UNIT VALUE
1
AT GR ANTAT PAYMENT
1 October 2022 (Tranche 1)30-Sep-26101,298––101,2982.82–
1 October 2022 (Tranche 2)30-Sep-27101,298––101,2982.82–
1 October 2023 (Tranche 1)30-Sep-28124,226––124,2262.38–
1 October 2023 (Tranche 2)30-Sep-29124,226––124,2262.38–
1 October 202430-Sep-30–222,299–222,2992.66–
TOTAL
2
451,047222,299–673,346
1 Co-op Unit value is based on the 12-month Volume Weighted Average Price of a Co-operative Share.
2 The figures in this table may not sum to the total due to rounding.
Farm Unit
GR ANT DATEPAYMENT DATEBALANCE AS AT 31 JULY 2024UNITS GRANTED DURING FY25UNITS PAID DURING FY25BALANCE AS AT 31 JULY 2025
UNIT VALUE
3
AT GR ANTAT PAYMENT
1 October 2022 (Tranche 1)30-Sep-26106––1062,700–
1 October 2022 (Tranche 2)30-Sep-27106– –1062,700–
1 October 2023 (Tranche 1)30-Sep-2888––883,365–
1 October 2023 (Tranche 2)30-Sep-2988––883,365–
1 October 202430-Sep-30–171–1713,454–
TOTAL
4
387171–558
3 Farm Unit value is based on the 3-year average Owner Operator Dairy Operating Profit/ha as published by the DairyNZ Economic Survey.
4 The figures in this table may not sum to the total due to rounding.
Alignment Rights held by the CEO as at 31 July 2025
Mr Hurrell has been awarded three grants under the Alignment Rights Plan. The tables below summarise
the number of Co-op Units and Farm Units held at the end of FY24, the number granted during FY25 and
the resulting balance at the end of FY25. No payments have been made relating to the Co-op Units and
Farm Units included in the below table, other than the dividend equivalent payments as set out in the CEO
Remuneration Paid and Earned sections of this report. The value of these units increases or decreases
relative to performance of a Co-operative Share (in the case of the Co-op Unit) and relative to on-farm
profitability per hectare (in the case of the Farm Unit).
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REMUNERATION RANGE (NZD)
NEW ZEALAND
HEAD OFFICE
1
REGIONAL
NEW ZEALAND
1
OFFSHORE
2
CESSATIONS
3
TOTAL
$100,000 $110,000 79 1,205 191 67 1,542
$110,000 $120,000 61 1,929 131 65 2,186
$120,000 $130,000 56 1,665 150 52 1,923
$130,000 $140,000 90 933 170 40 1,233
$140,000 $150,000 55 601 191 25 872
$150,000 $160,000 48 620 205 17 890
$160,000 $170,000 53 566 155 21 795
$170,000 $180,000 44 220 135 15 414
$180,000 $190,000 39 164 118 5 326
$190,000 $200,000 61 128 76 7 272
$200,000 $210,000 46 92 81 10 229
$210,000 $220,000 34 74 61 9 178
$220,000 $230,000 26 53 54 7 140
$230,000 $240,000 38 45 47 2 132
$240,000 $250,000 23 34 37 9 103
$250,000 $260,000 24 16 43 1 84
$260,000 $270,000 15 14 23 6 58
$270,000 $280,000 28 16 20 5 69
$280,000 $290,000 19 15 24 3 61
$290,000 $300,000 16 9 16 2 43
$300,000 $310,000 12 12 13 2 39
$310,000 $320,000 18 10 12 1 41
$320,000 $330,000 12 4 11 0 27
$330,000 $340,000 7 4 11 1 23
$340,000 $350,000 4 5 10 2 21
$350,000 $360,000 4 2 9 3 18
$360,000 $370,000 6 12 10 1 29
$370,000 $380,000 4 4 15 2 25
$380,000 $390,000 5 4 6 0 15
$390,000 $400,000 4 5 12 3 24
$400,000 $410,000 3 0 13 1 17
$410,000 $420,000 4 1 5 1 11
$420,000 $430,000 3 2 6 0 11
$430,000 $440,000 4 3 7 1 15
$440,000 $450,000 2 5 6 0 13
$450,000 $460,000 1 2 7 1 11
Employee remuneration over $100,000
Fonterra operates in a number of countries where remuneration market levels differ widely. During
the year ended 31 July 2025, the number of employees, not being Directors of Fonterra, who received
remuneration, incentives, and other benefits (including superannuation and allowances etc) exceeding
$100,000 was as follows:
Rajiv, Auckland
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REMUNERATION RANGE (NZD)
NEW ZEALAND
HEAD OFFICE
1
REGIONAL
NEW ZEALAND
1
OFFSHORE
2
CESSATIONS
3
TOTAL
$460,000 $470,000 3 1 6 0 10
$470,000 $480,000 6 0 3 1 10
$480,000 $490,000 3 2 0 1 6
$490,000 $500,000 3 0 4 0 7
$500,000 $510,000 1 1 1 1 4
$510,000 $520,000 2 0 6 0 8
$520,000 $530,000 3 0 4 0 7
$530,000 $540,000 2 0 5 0 7
$540,000 $550,000 2 0 4 1 7
$550,000 $560,000 1 0 2 0 3
$560,000 $570,000 3 0 3 2 8
$570,000 $580,000 0 0 1 0 1
$580,000 $590,000 1 0 0 0 1
$590,000 $600,000 2 0 1 0 3
$600,000 $610,000 1 1 3 0 5
$610,000 $620,000 1 0 1 2 4
$620,000 $630,000 2 0 1 0 3
$630,000 $640,000 0 0 0 1 1
$640,000 $650,000 1 0 2 0 3
$650,000 $660,000 0 0 1 0 1
$660,000 $670,000 1 0 2 1 4
$670,000 $680,000 1 1 0 1 3
$680,000 $690,000 0 0 4 1 5
$690,000 $700,000 1 0 2 0 3
$700,000 $710,000 0 0 1 0 1
$710,000 $720,000 1 0 0 2 3
$720,000 $730,000 0 0 0 2 2
$730,000 $740,000 0 0 0 1 1
$740,000 $750,000 1 0 1 0 2
$750,000 $760,000 1 0 2 0 3
$760,000 $770,000 0 0 1 0 1
$770,000 $780,000 1 0 1 0 2
$780,000 $790,000 0 0 1 1 2
$790,000 $800,000 0 0 1 0 1
$800,000 $810,000 0 0 1 0 1
$810,000 $820,000 1 0 1 0 2
REMUNERATION RANGE (NZD)
NEW ZEALAND
HEAD OFFICE
1
REGIONAL
NEW ZEALAND
1
OFFSHORE
2
CESSATIONS
3
TOTAL
$820,000 $830,000 1 0 1 0 2
$850,000 $860,000 1 0 0 0 1
$920,000 $930,000 0 0 2 0 2
$940,000 $950,000 0 0 1 0 1
$990,000 $1,000,000 1 0 1 0 2
$1,000,000 $1,010,000 0 0 1 0 1
$1,060,000 $1,070,000 0 0 0 1 1
$1,100,000 $1,110,000 0 0 2 0 2
$1,180,000 $1,190,000 0 1 0 0 1
$1,220,000 $1,230,000 0 0 0 1 1
$1,270,000 $1,280,000 0 0 1 0 1
$1,350,000 $1,360,000 2 0 0 0 2
$1,380,000 $1,390,000 1 0 0 0 1
$1,420,000 $1,430,000 0 0 1 0 1
$1,460,000 $1,470,000 0 0 1 0 1
$1,470,000 $1,480,000 1 0 0 0 1
$1,500,000 $1,510,000 0 0 1 0 1
$1,570,000 $1,580,000 0 0 1 0 1
$1,600,000 $1,610,000 1 0 0 0 1
$1,910,000 $1,920,000 1 0 0 0 1
$3,620,000 $3,630,000 0 0 1 0 1
$4,000,000 $4,010,000 0 0 0 1 1
$6,100,000 $6,110,000 1 0 0 0 1
Tot al s1,003 8,481 2,161 408 12,053
The number of employees who received remuneration, incentives, and other benefits exceeding $100,000
varies from year to year. This number is impacted by a variety of factors including incentive payments,
overtime paid, termination entitlements, and remuneration increases provided in each respective year.
Exchange rates for those employees paid in currencies other than New Zealand dollar can also impact
employees either meeting or missing the threshold of $100,000.
1 Includes employees employed in New Zealand during the reporting period.
2 Includes employees employed in an offshore operation during the reporting period. Amounts paid in foreign currency have
been converted at the average conversion rate for the period. As Fonterra has a significant offshore population, the number of
offshore employees exceeding the fixed figure of $100,000 increases if the New Zealand dollar currency weakens significantly.
Should the New Zealand dollar strengthen against those markets’ currencies, these same individuals may not be reported in
future lists.
3 Cessations include employees that have been terminated or retired during the reporting period, this includes employees in
businesses divested part way through the financial year. The amounts paid to former employees include salary and bonuses
for the current period and prior period bonuses that have been paid in the current period.
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Within New Zealand, employees who received remuneration, incentives, and other benefits (including
superannuation and allowances etc) exceeding $100,000 were based throughout the country as follows:
REGION100K POPULATION
Auckland1,562
Bay of Plenty354
Canterbury1,356
Manawatu-Wanganui616
Northland409
Rest of New Zealand202
Southland597
Taranaki1,369
Waikato3,019
Grand Total9,484
In addition to being a significant employer in New Zealand, Fonterra also has employees in markets around
the world. Those who received remuneration, incentives, and other benefits (including superannuation and
allowances etc) exceeding $100,000 were based in markets around the world as follows:
REGION100K POPULATION
Australia1,214
Europe112
Greater China365
Latin America14
New Zealand9,484
Rest of Asia306
Rest of World74
United States76
Cessations
408
Grand Total12,053
Melody & Ted, Auckland
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Director remuneration
Our Constitution modifies the Board’s discretion to set remuneration of Elected Directors. The Directors’
Remuneration Committee, comprising six shareholders elected in accordance with the Constitution,
makes recommendations for shareholder approval as to the level of Elected Directors’ fees. Elected
Directors are those Directors elected by shareholders in accordance with clauses 12.2 and 33.4 of
our Constitution.
The members of the Directors’ Remuneration Committee as at 31 July 2025 were Conall Buchanan (Chair),
Ellen Bartlett, Simon Couper, Mike Pavletich, Richard Stalker and Shirley Trumper.
Directors and employees only attend Directors’ Remuneration Committee meetings at the invitation of
the Committee.
Given the arrangements outlined above, we do not have a specific policy for remuneration of Directors.
At the Annual Meeting on 14 November 2024, shareholders approved, on the recommendation of
the Directors’ Remuneration Committee, the following amounts of remuneration to apply from that
date onwards:
NZD
Chair498,000 per annum
Elected Directors202,000 per annum
Discretionary additional payments to the Chair of permanent Board
Committees (except when that person is the Chair of the Board, the
Chair of the Audit, Finance and Risk Committee, or is already in receipt
of a Committee Chair allowance)
38,500 per annum
Discretionary additional payment to the Chair of the Audit, Finance and
Risk Committee
53,000 per annum
The Board has approved payment of the discretionary additional payments, at the rates outlined above.
The Board has discretion to set the remuneration of Appointed Directors, with such remuneration not
required to be approved at the Annual Meeting. The Board has historically remunerated Appointed
Directors at the same level as Elected Directors, in line with Directors’ Remuneration Committee
recommendations. This approach was taken by the Board for FY25.
The People, Culture and Safety Committee and the Chair of the Board have the discretion to allocate a
discretionary pool of up to $200,000 per annum to remunerate Directors for additional duties, workload,
and responsibilities. In FY25, the People, Culture and Safety Committee and the Chair of the Board
approved payments from the discretionary pool to recognise the additional workload undertaken by
those Directors who were members of more than three Board Committees during that period (including
non-permanent Committees but excluding Board Committees they collected a Chair fee for), a payment
to Cathy Quinn to recognise her additional work in relation to the proposed Consumer divestment, and
payments to the two Directors resident in Australia (Holly Kramer and Alistair Field) as an allowance for
their time travelling to New Zealand on Fonterra business.
Fees paid by subsidiary or associate companies in respect of Fonterra Directors or employees appointed
by Fonterra as Directors of those companies are payable directly to Fonterra.
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The total remuneration and value of other benefits (not including superannuation contributions, if applicable) received by each Director in FY25 are below:
NZD
BOARD FEES
COMMITTEE
CHAIR FEES
DISCRETIONARY
POOL
TOTAL
REMUNERATION
Clinton Dines
1
56,68256,682
Alistair Field
2
134,44115,000149,441
Brent Goldsack200,39915,000215,399
Leonie Guiney
3
56,68256,682
Bruce Hassall (Chair of the Audit, Finance and Risk Committee)200,39952,56315,000267,962
Holly Kramer
4
(Chair of the People, Culture and Safety Committee) 200,31237,56615,000252,878
Andy Macfarlane
5
(Chair of the Disclosure Committee)200,39927,28915,000242,688
Peter McBride (Chair of the Board of Directors)493,925493,925
John Nicholls (Chair of the Co-operative Relations Committee)200,39938,06315,000253,462
Cathy Quinn
6
(Chair of the Strategic Review Committee and Due Diligence Committee)200,39938,06330,000268,462
Alison Watters (Chair of the Sustainability and Innovation Committee)200,39938,063238,462
1 Mr Dines ceased to be a Director in November 2024.
2 Mr Field commenced as a Director in November 2024. Mr Field’s fees vary for this period due to his remuneration being received a month in arrears.
3 Ms Guiney ceased to be a Director in November 2024.
4 Ms Kramer’s fees vary for this period due to her remuneration being received a month in arrears.
5 Mr Macfarlane became Chair of the Disclosure Committee on 15 November 2024.
6 Ms Quinn commenced as Chair of the Strategic Review Committee and Due Diligence Committee on 1 November 2024, and ceased to be Chair of the Disclosure Committee on 14 November 2024.
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Directors’ disclosures
Disclosures of Directors’ interests
The Directors have made the following general disclosures of interest during FY25. Italicised positions
indicate interests that ceased or were amalgamated during FY25.
DIRECTORINTEREST
Alistair Field
BlueScope Steel LtdNon-executive Director
Alcoa CorporationNon-executive Director
Brent Goldsack
Henergy Cage-Free Limited (amalgamated April 2024)Director
Leonie Guiney
Hillcrest Dairy Limited (ceased September 2024)Director and Shareholder
Bruce Hassall
Vector Limited (ceased September 2024)Director
Holly Kramer
Nbryo (ceased May 2025)Independent Non- Executive Director
Peter McBride
Shamrock Fern P and L LtdDirector and Shareholder
Trinity Lands LimitedChair
Elliot Trust (ceased February 2025)Advisor
Andy Macfarlane
W. H. Collins & Co., LimitedChair
Du Velle Properties LimitedDirector
Riverbank Farm (Ashburton) Limited (ceased July 2025)Director and Shareholder
Stoneybeck Holdings Limited (amalgamated)Director and Shareholder
Windwhistle Pastoral Limited (ceased April 2024)Shareholder
John Nicholls
Valley View Farming LimitedDirector and Indirect Shareholder
Taepu Land LimitedIndirect Shareholder
Alison Watters
Comhla Vet LimitedChair
Livestock Improvement Corporation Limited (ceased
September 2024)
Director
LIC Agritechnology Company Limited (ceased September 2024)Director
Agriculture Resources Limited (ceased November 2024)Shareholder
Use of information by Directors
During FY25, there were no notices from Directors requesting to disclose or use information received
in their capacity as Directors which would not otherwise have been available to them.
Indemnity and insurance
Fonterra has given indemnities to, and has effected insurance for, the Directors and executives of
Fonterra and its related companies, in accordance with section 162 of the Companies Act and clause 35
of Fonterra’s Constitution. Except for specific matters that are expressly excluded (such as the incurring
of penalties and fines that may be imposed for breaches of law), Directors and executives are indemnified
and insured against monetary losses as a result of actions undertaken by them in the course of their duties.
New disclosures of Directors’ interests in securities
There were no new disclosures of holdings of Fonterra securities made by Directors during FY25.
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Disclosure of Directors’ interests in securities transactions
Directors disclosed that they (or their associated persons) acquired or disposed of a relevant interest
in financial products during FY25 as follows:
Co-operative Shares transactions
DIRECTOR
NUMBER OF
SECURITIES
ACQUIRED /
(DISPOSED)
CONSIDERATION
(NZD)
DATE OF
TRANSACTION
Leonie Guiney27,80099,5242 October 2024
Andy Macfarlane(80,000)
1
–31 October 2024
Cathy Quinn125,000494,63817 October 2024
Cathy Quinn125,000499,57518 October 2024
Cathy Quinn125,000499,57518 October 2024
1 Transferred between wholly owned entities.
Unit transactions
DIRECTOR
NUMBER OF
SECURITIES
ACQUIRED /
(DISPOSED)
CONSIDERATION
(NZD)
DATE OF
TRANSACTION
Andy Macfarlane(123,724)–31 October 2024
Wholesale Bond transactions
DIRECTOR
NUMBER OF
SECURITIES
ACQUIRED /
(DISPOSED)
CONSIDERATION
(NZD)
DATE OF
TRANSACTION
Cathy Quinn(8,000,000)
1
–8 October 2024
Cathy Quinn(7,510,000)
1
–14 October 2024
1 FCG at 5.08% matured on 19 June 2025.
Quoted Financial Products
The following table identifies the Quoted Financial Products in which each Director has a relevant interest
(defined in the Financial Markets Conduct Act 2013) as at 31 July 2025:
DIRECTORFSF UNITS
CO-OPERATIVE
SHARES
Brent Goldsack3,493409,843
Andy Macfarlane147,0411,965,990
Peter McBride129,713509,730
John Nicholls–2,083,000
Cathy Quinn–819,280
Alison Watters9,317234,737
To qualify as an Elected Director under the Fonterra Constitution, a person must be a shareholder,
a shareholder of a company that is a shareholder, a member of a partnership that is a shareholder,
or have a legal or beneficial interest in, or a right or entitlement to participate directly in the
distributions of, a body corporate that is a shareholder of Fonterra. All current Elected Directors
have relevant interests in Co-operative shares.
Given the variety of ways that farmer shareholders can organise their interests, it is possible for Fonterra
Elected Directors to have an interest in Co-operative shares without this being a relevant interest as
defined in the Financial Markets Conduct Act 2013, and those interests are not disclosed above.
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Statutory information
Twenty largest registered shareholders as at 31 July 2025
1
REGISTERED NAMENUMBER OF SHARES%
Fonterra Farmer Custodian Limited - Fund
2
107,410,9846.67
Fonterra Farmer Custodian Limited - Market Makers
2
3,770,5890.23
Fortuna Group Limited2,607,3230.16
Premier Dairies Limited2,131,4830.13
NZ Rural Property Trust Nominees Limited – Shenstone1,600,7610.09
Trinity Lands Limited1,320,6140.08
Lyndhurst Farm Limited1,309,3340.08
NZ Rural Property Trust Nominees Limited - Rocklea1,240,0000.07
Raymond Ford Seebeck1,232,3780.07
Align Farms Limited1,211,9680.07
Anne Maureen Janson & Carrol Garth Janson 1,200,0000.07
Jillian Margaret Harrison & Neville William Harrison
& Kelbretar Trustee Limited
1,169,2450.07
Snow View Dairy Limited1,161,2790.07
Melrose Dairy Limited1,106,7000.06
Souther Farms NZ Limited1,096,4160.06
NZ Rural Property Trust Nominees Limited - Penshurst1,027,6060.06
Singletree Dairies 2013 Limited1,012,7760.06
Theland Tahi Farm Group Limited997,2180.06
Coringa Park Dairies Limited988,4500.06
Cumberland Dairy Farm Limited980,2580.06
1 The NZX Listing Rules require that Fonterra’s annual report contain the names and holdings of the registered holders having
the 20 largest holdings of Co-operative shares as at a date not earlier than two months before publication of the annual report.
There is a separate requirement in the Financial Markets Conduct Act 2013 to disclose in the annual report those persons who
have a relevant interest in Co-operative shares in excess of five per cent (a ‘substantial holding’), where this information has
been provided to Fonterra. Accordingly, the list of the 20 largest holdings of Co-operative shares is not required to show, and
does not purport to show, the top 20 holdings of relevant interests in Co-operative shares which may be owned or controlled
by a person or entity and their associated entities. Other people or entities may have relevant interests in a greater number of
Co-operative shares than those listed above. However, it is not possible for Fonterra to accurately determine those interests,
nor is it a requirement of the NZX Listing Rules for those interests to be reported in the annual report.
2 Fonterra Farmer Custodian Limited holds Co-operative shares for the Fonterra Shareholders’ Fund, and for the Registered
Volume Providers (market makers).
Distribution of shareholders and holdings as at 31 July 2025
SIZE OF HOLDING
NUMBER OF
SHAREHOLDERS%
NUMBER OF
SHARES%
1 – 50,000 1,485 15.68 38,477,054 2.39
50,001 – 100,000 2,370 25.03 181,729,004 11.29
100,001 – 200,000 3,111 32.86 442,683,614 27.51
200,001 – 400,000 1,970 20.81 541,484,262 33.65
400,001 and over 532 5.62 404,816,621 25.16
Tot al 9,468 100 1,609,190,555 100
Substantial product holders as at 31 July 2025
According to notices given under the Financial Markets Conduct Act 2013, the following were substantial
product holders in Fonterra through having a relevant interest in Co-operative shares:
SUBSTANTIAL PRODUCT HOLDERNUMBER OF VOTING SECURITIESDATE OF MOST RECENT NOTICE
Fonterra Farmer Custodian Limited111,816,18330 July 2018
FSF Management Company Limited111,735,18330 July 2018
The total number of Co-operative shares on issue as at 31 July 2025 was 1,609,190,555.
More than one relevant interest can exist in the same voting financial products. Fonterra Farmer
Custodian Limited holds Co-operative shares for the Fonterra Shareholders’ Fund (Fund), of which
FSF Management Company Limited is the Manager. These two notices therefore refer to substantially
the same Co-operative shares. Fonterra Farmer Custodian Limited also holds some Co-operative shares
for the Registered Volume Providers (market makers) in respect of the Fund.
The substantial product holders listed above and the Registered Volume Providers do not have voting
rights (as set out in the Constitution).
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Twenty largest registered holders of FCG050 $100 million retail bonds as at
4 August 2025
REGISTERED NAMENUMBER OF BONDS%
FNZ Custodians Limited 13,741,000 13.74
Custodial Services Limited 11,414,000 11.41
BNP Paribas Nominees (NZ) Limited – NZCSD 10,919,000 10.92
BNP Paribas Nominees (NZ) Limited – NZCSD 9,971,000 9.97
HSBC Nominees (NZ) Limited O/A Euroclear Bank – NZCSD 9,223,000 9.22
HSBC Nominees (NZ) Limited – NZCSD 8,570,000 8.57
HSBC Nominees (NZ) Limited A/C State Street – NZCSD 7,530,000 7.53
Generate KiwiSaver Public Trust Nominees Limited 6,275,000 6.28
P ub lic Tr us t 4,404,000 4.40
NZX WT Nominees Limited 2,175,000 2.18
Forsyth Barr Custodians Limited 1,941,000 1.94
FNZ Custodians Limited 1,561,000 1.56
Citibank Nominees (NZ) Limited – NZCSD 1,000,000 1.00
Dunedin City Council 1,000,000 1.00
Rgtkmt Investments Limited 1,000,000 1.00
Forsyth Barr Custodians Limited 825,000 0.83
TEA Custodians Limited Client Property Trust Account – NZCSD 761,000 0.76
JBWere (NZ) Nominees Limited 744,000 0.74
JBWere (NZ) Nominees Limited 500,000 0.50
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD 400,000 0.40
Distribution of FCG050 $100 million retail bond holders as at 4 August 2025
SIZE OF HOLDING
NUMBER OF
BONDHOLDERS%
NUMBER OF
BONDS%
5,000 – 9,99942.96 28,000 0.03
10,000 – 49,9997958.52 1,793,000 1.79
50,000 – 99,9991511.11 840,000 0.84
100,000 – 999,9992216.30 6,615,000 6.62
1,000,000 and over1511.11 90,724,000 90.72
Tot al135100 100,000,000 100
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Twenty largest registered holders of FCG060 $300 million retail bonds as at
4 August 2025
REGISTERED NAMENUMBER OF BONDS%
BNP Paribas Nominees (NZ) Limited 63,169,000 21.06
Custodial Services Limited 59,562,000 19.85
TEA Custodians Limited Client Property Trust Account – NZCSD 42,250,000 14.08
FNZ Custodians Limited 31,744,000 10.58
HSBC Nominees (NZ) Limited A/C State Street – NZCSD 17,200,000 5.73
HSBC Nominees (NZ) Limited – NZCSD 12,000,000 4.00
Forsyth Barr Custodians Limited 11,492,000 3.83
Citibank Nominees (NZ) Limited – NZCSD 10,500,000 3.50
Generate KiwiSaver Public Trust Nominees Limited 9,717,000 3.24
JBWere (NZ) Nominees Limited 4,910,000 1.64
NZPT Custodians (Grosvenor) Limited – NZCSD 4,400,000 1.47
Dunedin City Council 4,000,000 1.33
MT Nominees Limited – NZCSD 3,000,000 1.00
NZX WT Nominees Limited 2,857,000 0.95
Forsyth Barr Custodians Limited 2,443,000 0.81
Investment Custodial Services Limited 1,786,000 0.60
FNZ Custodians Limited 1,723,000 0.57
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD 1,500,000 0.50
ANZ Custodial Services New Zealand Limited – NZCSD 1,265,000 0.42
Charles Thomas Holbrook Ashworth 1,000,000 0.33
Distribution of FCG060 $300 million retail bond holders as at 4 August 2025
SIZE OF HOLDING
NUMBER OF
BONDHOLDERS%
NUMBER OF
BONDS%
5,000 – 9,999135.86 81,000 0.03
10,000 – 49,99912857.66 2,692,000 0.90
50,000 – 99,9992913.06 1,600,000 0.53
100,000 – 999,9993214.41 9,109,000 3.04
1,000,000 and over209.01 286,518,000 95.51
Tot al222100 300,000,000 100
Co-operative status
In accordance with section 10 of the Co-operative Companies Act 1996 (the Co-operative Companies Act),
the Directors of Fonterra unanimously resolved on 21 August 2025 that Fonterra was, for FY25,
a co-operative company. The opinion was based upon the fact that:
Ljthroughout that period the principal activities of Fonterra have been the activities stated in clause 1.3
of Fonterra’s Constitution:
• the manufacture and sale of butter, cheese, dried milk, casein, or any other product derived from milk
or milk solids supplied to Fonterra by its shareholders;
• the sale to any person of milk or milk solids supplied to Fonterra by its shareholders;
• the collection, treatment, and distribution for human consumption of milk or cream supplied to
Fonterra by its shareholders.
Ljeach of Fonterra’s principal activities are co-operative activities (as defined in section 3 of the
Co-operative Companies Act).
Ljthroughout that period, not less than 60% of the voting rights attaching to shares in Fonterra have been
held by transacting shareholders (as defined in section 4 of the Co-operative Companies Act).
Current credit rating status
S&P Global Ratings’ long-term rating for Fonterra is A- with a stable rating outlook. Fitch Ratings’ long-
term rating is A with a stable rating outlook. Retail Bonds have been rated the same as Fonterra’s long-
term rating by both S&P Global Ratings and Fitch Ratings.
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Stock exchange listings
Fonterra’s Co-operative shares are listed and quoted on the NZX Main Board operated by the NZX
Limited under the code ‘FCG’. In addition, Fonterra has a Non-Standard (NS) designation on the NZX Main
Board to notify the market of our unique governance arrangements. Details of the waivers and rulings
granted by the NZX in respect of Fonterra’s NS designation can be found below and on our website.
Fonterra has two retail bonds listed and quoted on the NZDX under the codes ‘FCG050 and ‘FCG060’’.
Fonterra also has a Euro Medium Term Note Programme listed on the Singapore Stock Exchange.
As at 31 July 2025, there were 1,609,190,555 Co-operative shares on issue.
Exchange rulings and waivers
As part of Fonterra’s migration to the NZX Main Board, Fonterra applied for and was granted a number
of rulings and waivers from specific NZX Listing Rules on 17 December 2024. Details of the waivers
and rulings granted to Fonterra by NZ RegCo or relied upon by Fonterra during the financial year ended
31 July 2025 are available on our website.
Waiver from NZX Listing Rule 5.1.1
On 17 December 2024, NZ RegCo granted Fonterra a waiver from NZX Listing Rule 5.1.1(b) to permit
entry into and performance of its Primary Business Undertakings, these being transactions or series
of linked or related transactions entered relating to the purchase and payment by Fonterra for milk
or with a customer for the supply of dairy products derived from milk supplied to Fonterra.
The waiver was granted on the conditions that:
LjFonterra’s Directors certify to the NZX that the waiver is in the best interests of both Fonterra and
its shareholders;
LjFonterra’s Directors certify to the NZX that such transactions are in the best interests of Fonterra and
its shareholders, do not significantly change the nature of Fonterra’s business and be in the ordinary
course of business;
Lja summary of the core grounds for these certification must be provided to the NZX at the time
Fonterra enters into any transactions covered by the waiver, and this summary must be published
to the NZX alongside the certification; and
Ljthe waiver, its conditions and the implications of the waiver are disclosed in Fonterra’s first annual
report following the publication of the waivers dated 17 December 2024.
The waiver does not exempt Fonterra from seeking shareholder approval for any transaction that would
significantly change the nature of its business or exceed the thresholds set out in NZX Listing Rule 5.1.1
and the Companies Act. Shareholders continue to retain protections under the Companies Act, including
the requirement for special resolution approval for major transactions exceeding 50% of Fonterra’s
average market capitalisation.
Waiver from NZX Listing Rule 5.2.1
On 17 December 2024, NZ RegCo granted Fonterra a waiver from NZX Listing Rule 5.2.1 to permit it to
enter into and perform certain transactions with its Supplying Shareholders without seeking shareholder
approval. These transactions include:
Ljthose entered into in the ordinary course of business with all or a number of Supplying Shareholders,
where participation and terms are determined according to general criteria applicable to that
group; and
Ljtransactions for the purchase and payment of milk supplied by Supplying Shareholders
(known together as the “Exempted Rule 5.2 Transactions”)
The waiver was granted on the conditions that:
LjFonterra’s Directors certify to NZX that the waiver is in the best interests of both Fonterra and
its shareholders;
LjFonterra’s Directors certify that the Exempted Rule 5.2 Transactions are not influenced by any
undue influence from a Related Party and are conducted on arm’s length terms;
Lja summary of the core grounds for these certifications must be provided to NZX at the time Fonterra
enters into any Exempted Rule 5.2 Transactions, and this summary must be published to the NZX
alongside the certification; and
Ljthe waiver, its conditions and the implications of the waiver are disclosed in Fonterra’s first annual
report following the publication of the waivers dated 17 December 2024.
This waiver acknowledges the co-operative nature of Fonterra’s business, where transactions with
Supplying Shareholders – including Elected Farmer Directors – are routine and governed by transparent
criteria. It ensures that such transactions do not confer special benefits or favourable treatment, and that
shareholder protections under the NZX Listing Rules and Companies Act remain in place for any material
or non-routine transactions.
NZX trading halts
No trading halts were placed on Fonterra securities by NZX in the financial year ended 31 July 2025.
Donations
Donations of $1,680,317 were made by Fonterra and its subsidiaries during FY25.
This does not include other amounts paid in relation to sponsorship or partnership arrangements.
For further information regarding our Doing Good Together programme and our community partnerships,
refer to page 39.
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Subsidiary company directors
The following companies were subsidiaries of Fonterra as at 31 July 2025. Directors as of this date are
listed below. Those who resigned during the year are denoted with an (R), and alternate Directors are
denoted with an (A).
NEW ZEALAND
Canpac International LimitedB T L Morar , P D Wynen
Dairy Industry Superannuation Scheme
Trustee Limited
M A Apiata-Wade, B J Kerr, T P McGuinness, R T Price,
S E Pinny, D W C Scott (R), E Y M A El Shall, P D Wynen
Fonterra (Delegated Compliance Trading
Services) Limited
G A Duncan, S J Reid
Fonterra (International) LimitedG A Duncan, R T Whiteman
Fonterra (Kotahi) LimitedM R Cronin, A L Palairet
Fonterra (Middle East) LimitedG A Duncan, R T Whiteman
Fonterra (New Zealand) LimitedG A Duncan, R T Whiteman
Fonterra (North Asia) LimitedG A Duncan, S J Reid
Fonterra Brands (New Zealand) LimitedM R Cronin, R J Dedoncker, A B Murray
Fonterra Commodities LimitedG A Duncan, D McGowan
Fonterra Equities LimitedG A Duncan, S J Reid
Fonterra Finance Corporation LimitedG A Duncan, S J Reid
Fonterra Ingredients LimitedG A Duncan, B T L Morar
Fonterra LATAM Brands LimitedG A Duncan, J B Nichols
NEW ZEALAND
Fonterra LimitedM R Cronin (R) , A van der Nagel (R), P D Murphy (R),
C K Kane, A L Palairet
Fonterra PGGRC LimitedG A Duncan, J P Hill
Fonterra TM LimitedG A Duncan, S J Reid
Glencoal Energy LimitedG A Duncan, P D Wynen
Ki Tua Fund GP LimitedR Barrangou, M R Cronin, W F Liao, K Mistry-Mehta
Kotahi GP LimitedM R Cronin, A L Palairet, D J Courtney, R T Whiteman
Kowbucha LimitedJ P Hill, K Mistry-Mehta
Lactanol LimitedG A Duncan, B T L Morar
Mainland Group Holdings Limited
(previously NZ Milk International Limited)
G A Duncan, H L Moore (R), R J Dedoncker
Milktest GP LimitedP J van Boheemen, P G Brown, R G Townshend,
T A Winter, C J Rutherford, A J Wicks
MyMilk LimitedM R Cronin, K F Shaw
New Zealand Dairy BoardG A Duncan, H L Moore
New Zealand Milk Brands LimitedG A Duncan, S J Reid
NZAgbiz LimitedA Douglas, G A Duncan
RD1 LimitedA Douglas, G A Duncan
SAITL LimitedT A Winter, A J Wicks
Whareroa Co-Generation LimitedG A Duncan, P D Wynen
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OVERSEAS
Australasian Food Holdings Pty. Limited
[Australia]
R J Dedoncker, G A Duncan
Bonland Cheese Trading Pty. Limited
[Australia]
R J Dedoncker, G A Duncan
Dairymas (Malaysia) Sdn Bhd [Malaysia]A B Murray (R), F Quak, G Thiagarajan, S W Yeo,
R J Dedoncker
Darnum Park Pty. Limited. [Australia]R J Dedoncker, G A Duncan
Fonterra (Brasil) Limitada [Brazil]R F Aracil Filho, B de Luca Zanatta
Fonterra (Canada), Inc. [Canada]R J Allen, G A Duncan, B Kipping, A Geraghty
Fonterra (China) Limited [Hong Kong]M R Cronin, G A Duncan
Fonterra (Europe) Coöperatie U.A.
[Netherlands]
M van de Poll, M Bones (R), G A Duncan, D Krabbe
Fonterra (France) SAS [France]M Bones
Fonterra (Ing.) Limited [Mauritius]A Aggarwal, T Chow (R), P Ming, R J Allen, C Lee, G Lee,
K Lee
Fonterra (Japan) Limited [Japan]K Kumagai, K Kumagai, A Okuyama, R Whiteman,
R Allen, T Kunimoto,
Fonterra (Korea) Limited Liability Company
[Korea]
G A Duncan, T Kunimoto
Fonterra (Logistics) Limited
[United Kingdom]
M Bones, G A Duncan, T J Mackett
Fonterra (Malaysia) Sdn Bhd [Malaysia]
(previously Anmum (Malaysia) Sdn Bhd)
A B Murray (R), F Quak, G Thiagarajan, S W Yeo,
R J Dedoncker
Fonterra (Mexico) S.A. de C.V. [Mexico]L Barona Mariscal (A), F R Camacho (A), G A Duncan,
J A Del Rio
Fonterra (SEA) Pte. Ltd. [Singapore]R Lawn, J Mueller-Leiendecker (R), B K Connolly
OVERSEAS
Fonterra (Thailand) Limited [Thailand]R Lawn, K Vunthanadit
Fonterra (USA) Inc. [United States]R J Allen (R), N R Christiansen, G A Duncan, A Geraghty,
B Johnston
Fonterra Australia Pty. Ltd. [Australia]R J Dedoncker, G A Duncan
Fonterra Brands (Australia) Pty. Ltd.
[Australia]
R J Dedoncker, G A Duncan
Fonterra Brands (Far East) Limited
[Hong Kong]
A Aggarwal, G A Duncan
Fonterra Brands (Guangzhou) Ltd. [China]
(in liquidation)
T T Lye, P A Turner, K A Wickham
Fonterra Brands (Hong Kong) Limited
[Hong Kong]
A Aggarwal, G A Duncan, S T Y Lam
Fonterra Brands (Malaysia) Sdn Bhd
[Malaysia]
A B Murray (R), F Quak, G Thiagarajan, S W Yeo,
R J Dedoncker
Fonterra Brands (New Young) Pte. Ltd.
[Singapore]
A Aggarwal, Y Li, C Lin, Y Lin, J Ling, S Mantry
Fonterra Brands (Singapore) Pte. Ltd.
[Singapore]
Y Nee (R), V Sivaraja, B K Connolly
Fonterra Brands (Thailand) Ltd. [Thailand]G Julcampa, S Nitkitjatorn, G Tucker, A B Murray
Fonterra Brands (Viet Nam) Company
Limited [Vietnam]
A B Murray (R), V Sivaraja, R J Dedoncker, C P Viet,
L R T de Silva
Fonterra Brands Indonesia, PT [Indonesia]D M Irfani, Y Wigneswaran, R Budiyanti,
A J T Punongbayan
Fonterra Brands Lanka (Private) Limited
[Sri Lanka]
M F Faizal, A B Murray (R), T Salpitikorala, V Sivaraja,
R J Dedoncker
Fonterra Brands Manufacturing Indonesia,
PT [Indonesia]
M A Nasution, T A B Siswanto, Y Wigneswaran,
R Budiyanti
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OVERSEAS
Fonterra Brands Myanmar Co. Ltd.
[Myanmar]
G A Duncan, S Nitkitjatorn, C D Wickramanayake
Fonterra Brands Phils. Inc. [Philippines]R A Mendoza, A B Murray (R), M J S Magsajo, P S Tan,
B K Connolly, K F Cillo, J M D Concepcion, R J Dedoncker
Fonterra Chile SpA [Chile]G A Duncan, J P Egaña Bertoglia (A), R Lavados
McKenzie (A), R Sepúlveda Seminario, J B Nichols,
A Saffie Vega (A)
Fonterra Commercial Trading (Shanghai)
Company Limited [China]
A Aggarwal, G A Duncan, J Dai
Fonterra Dairy Products Philippines
Incorporated
J M D Concepcion, R J Dedoncker, P S Tan
Fonterra Dairy Products Indonesia, PTR Budiyanti, Y Wigneswaran
Fonterra Egypt Limited [Egypt] (in liquidation)G A Duncan
Fonterra Europe Manufacturing B.V.
[Netherlands]
D Krabbe, I Jameel, B Morar
Fonterra Global Business Services Asia
Sdn Bhd [Malaysia] (in liquidation)
M B Suzari, G Thiagarajan
Fonterra India Private Limited [India]A Aggarwal, H D Gowans, S G Mathews
Fonterra Ingredients Australia Pty. Ltd.
[Australia]
R J Dedoncker, G A Duncan
Fonterra Insurance Pte. Limited [Singapore]
(previously Anchor Insurance Pte. Ltd)
G A Duncan, H N Toh (A), N Weerasooriya, A J Wicks
Fonterra Investments Pty Ltd [Australia]R J Dedoncker, G A Duncan
Fonterra Microbiome Research Centre
(Ireland) Limited [Ireland]
S Allan, M A J Birken, D Krabbe
OVERSEAS
Fonterra Milk Australia Pty. Ltd. [Australia]R J Dedoncker, G A Duncan
Fonterra Tangshan Dairy Farm (HK) Limited
[Hong Kong]
G A Duncan, G Yuan
Fonterra Vietnam Company LimitedR J Dedoncker, D S Roshan, V Sivaraja, C P Viet
Key Ingredients, Inc. [United States]R J Allen (R), N R Christiansen, G A Duncan, A Geraghty,
B Johnston
Kotahi Logistics Australia Pty Limited
[Australia]
D Ross, R Howell
Mainland Group (USA) Ltd (previously
Ki Tua Fund (US) Limited)
N R Christiansen, G A Duncan
Milk Products Holdings (North America)
Inc. [United States]
R J Allen (R), N R Christiansen, A Geraghty, B Johnston
New Tai Milk Products Co. Ltd. [Taiwan]A Aggarwal, T Chow (R), C Lee, G Lee, K Lee,
C Thomas (R), L Yu-Wen, R Allen
New Zealand Milk (Australasia) Pty. Ltd.
[Australia]
R J Dedoncker, G A Duncan
New Zealand Milk (Barbados) Ltd.
[Barbados]
N R Christiansen, G A Duncan
New Zealand Milk Products (Ethiopia) SC
[Ethiopia]
A B Abubeker, M B Abubeker, M Woodward, G Amade
Newdale Dairies (Private) Limited
[Sri Lanka]
M F Faizal, A B Murray (R), T Salpitikorala, V Sivaraja,
R Dedoncker
United Milk Tasmania Pty. Limited
[Australia]
R J Dedoncker, G A Duncan
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In this section
Independent Auditor’s Report120
Statement of Financial Position125
Statement of Profit or Loss
and Other Comprehensive Income126
Statement of Cash Flows 127
Statement of Changes in Equity128
Basis of Preparation129
Notes to the Financial Statements 131
Katie, Edendale
Financial
Statements
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Our firm has also provided other services to the Group in relation to climate related assurance, farmgate
milk price assurance, agreed upon procedures, vendor due diligence in relation to the divestment of the
Consumer and associated businesses and have been engaged to provide assurance over the compilation
of proforma information in the Notice of Meeting to shareholders. We also performed an audit of the
Mainland Group combined and carve-out financial statements in relation to the divestment. 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.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion
on the consolidated financial statements as a whole, taking into account the structure of the Group, the
financial reporting systems, processes and controls, and the industry in which it operates.
In establishing the overall approach to our audit, we considered the centralised nature of the Group’s
operations, the risk profile of countries where the Group operates, and changes taking place within the
business. We also considered the financial significance of each business unit together with any local
statutory audit requirements.
The Group financial statements are a consolidation of over 100 individual subsidiaries and equity
accounted investees. We scoped in 6 subsidiaries in New Zealand and Australia to be subject to audit
due to their financial significance and risk profile and we undertook audits of these subsidiaries ourselves.
In addition, we performed specific risk-focused audit procedures on certain transactions and balances
in respect of a further 6 subsidiaries in New Zealand, Australia, Japan, the USA and Singapore. We also
identified 10 additional subsidiaries in Indonesia, Netherlands, Malaysia, New Zealand, Philippines,
Saudi Arabia, Sri Lanka, Thailand, United Arab Emirates and Vietnam to include in our scoping to provide
additional coverage over the Group’s revenue and assets.
Taken together, the subsidiaries in scope for the Group audit accounted for 94% of the Group’s revenue
and 88% of the Group’s total assets. For the remaining subsidiaries, we performed analysis at an
aggregated Group level to confirm our assessment that there were no significant risks of material
misstatement associated with them.
We assigned materiality levels to in scope subsidiaries for performance of audits and specified audit
procedures. These were lower than the materiality level for the Group as a whole, ranging from
$5 million to $40 million, and determined with reference to the size and risk profile of the subsidiary.
We visited subsidiary locations in New Zealand, Australia, Singapore, China, Malaysia and Taiwan.
We held meetings with management responsible for the financial information of all in scope subsidiaries.
We audited the Group consolidation, financial statement disclosures and a number of significant audit
areas centrally in New Zealand. These included general IT controls, controls operated through the Group’s
shared service centre environment, the assessment of held for sale and discontinued operations, revenue
recognition, and impairment of goodwill and brands.
Independent Auditor’s Report
To the shareholders of Fonterra Co-operative Group Limited
Report on the audit of the consolidated financial statements
Opinion
We have audited the accompanying consolidated financial statements which comprise:
–the consolidated statement of financial position as at 31 July 2025;
–the consolidated statements of profit or loss and other comprehensive income, changes in equity
and cash flows for the year then ended; and
–notes, including material accounting policy information and other explanatory information.
In our opinion, the accompanying consolidated financial statements of Fonterra Co-operative
Group Limited (the Company) and its subsidiaries (the Group) on pages 125 to 176 present fairly,
in all material respects:
i. the Group’s financial position as at 31 July 2025 and its financial performance and cash flows
for the year ended on that date; and
ii. in accordance with New Zealand Equivalents to International Financial Reporting Standards
(NZ IFRS) issued by the New Zealand Accounting Standards Board and the International Financial
Reporting Standards (IFRS Accounting Standards) issued by the International Accounting
Standards Board.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)).
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of Fonterra Co-operative Group Limited in accordance with Professional and Ethical
Standard 1 International Code of Ethics for Assurance Practitioners (Including International Independence
Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and
the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), as applicable to audits of
financial statements of public interest entities. We have also fulfilled our other ethical responsibilities in
accordance with Professional and Ethical Standards 1 and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
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Independent Auditor’s Report continued
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually and on the consolidated financial statements as a whole. The materiality for the consolidated financial statements as a whole was set at $60 million determined with reference to a benchmark
of the cost of New Zealand sourced milk. We chose the benchmark because, in our view, this is a key measure of the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements in the current period. We summarise below those matters and
our key audit procedures to address those matters in order that the Shareholders as a body may better understand the process by which we arrived at our audit opinion.
Our procedures were undertaken in the context of and solely for the purpose of our audit opinion on the consolidated financial statements as a whole and we do not express discrete opinions on separate elements of
the consolidated financial statements.
THE KEY AUDIT MATTERHOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Revenue Recognition
Refer to Note 1 to the financial statements.
We considered the recognition of revenue from contracts with key customers and distributors
to be a key audit matter due to:
–the significance of the Group’s $26.4 billion (including $2.3 billion of revenue presented within
Discontinued Operations) of revenue to the financial statements as a whole;
–the level of judgement involved in establishing the timing and amount of revenue recognised
for certain customers and distributors, in particular judgement related to agent versus
principal considerations; and
–the extent of audit effort required to examine the Group’s contracts with customers in the
context of the size and complexity of this area, and the requirement under auditing standards
for us to consider fraud risk associated with revenue recognition.
The procedures we performed to evaluate whether revenue had been recognised appropriately included:
–identifying and testing relevant controls over revenue recognition, and using data analytics routines to evaluate
100% of sales transactions undertaken through the Group’s two core ERP systems (representing 92% of Group
revenue);
–assessing the Group’s revenue recognition accounting policies, and evaluating the application of these policies to
actual contracts with customers as noted below;
–evaluating contractual arrangements with key customers and distributors through discussion with management
and inspection of the underlying documentation, as well as sample testing other sales arrangements; and
–performing other audit procedures specifically designed to address the risk of management override of controls
including journal entry testing, applying particular focus to the timing of revenue transactions.
We completed these procedures and have no matters to report.
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Independent Auditor’s Report continued
THE KEY AUDIT MATTERHOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Goodwill and Brands
Refer to Note 12 to the financial statements.
We considered the Group’s annual impairment testing of goodwill and brands to be a key audit
matter due to the significance of the balance of $1.5 billion (including $0.9 billion classified as
assets held for sale) to the financial statements as a whole and the level of judgement involved
in determining the methodology and assumptions used in the testing.
In 2025 the Group reclassified certain assets and liabilities of the Group to held for sale
(See key audit matter – held for sale and discontinued operations). Immediately prior to the
reclassification to held for sale, relevant brand assets and cash generating units were assessed
for indicators of impairment. As a result of this assessment, the Australian cash generating
unit (CGU) was assessed for impairment by reference to its fair value less costs of disposal.
The Group also tested its consumer & foodservice brands for impairment using the relief from
royalty method.
Management engaged an independent valuer to assist in determining the fair value of the
Australian CGU, and valuation of the brands.
We focused our audit effort in respect of goodwill on the Australian CGU, which includes $287
million of goodwill and brands, and on the Anlene brand with a carrying amount of $171m due
to its heightened risk of impairment.
For the Australian CGU we focused on the following judgements and assumptions the Group
applied in their impairment testing:
–future maintainable earnings including the impact of the Australian milk price environment,
the Long Term Supply Agreements between the Group and Mainland Group Holdings Limited
and the effect of standalone costs;
–earnings multiple applied with reference to relevant comparable companies; and
–the impact of the use of the Bega license and probability weighting applied to
possible outcomes.
For the Anlene brand we focused on the following assumptions the Group applied in
their impairment testing:
–local currency sales forecasts and market royalty rates appropriate to each brand; and
–terminal growth rates and discount rates.
The procedures we performed to evaluate the impairment assessments included:
–assessing whether the methodology adopted was consistent with accepted valuation approaches of IAS 36
Impairment of Assets;
–evaluating the significant assumptions by comparing to historical trends, revenue and cashflow forecasts prepared
for the purposes of the divestment (including evaluating the impact of the Long Term Supply Agreements and
stand-alone costs) and external market data;
–comparing the earnings multiple to observed trading multiples using KPMG valuation specialists;
–comparing discount rates and terminal growth rates applied to the estimated future cash flows as well as the range
of market royalty rates for each brand to relevant benchmarks using KPMG valuation specialists;
–challenging the above assumptions and judgements by performing sensitivity analysis, considering a range of likely
outcomes based on various scenarios; and
–considering the appropriateness of the disclosures in the financial statements.
No impairment of goodwill was recognised in respect of the Australian CGU.
No impairment was recognised in respect of the Anlene brand.
We found the impairment testing methodologies to be consistent with IAS 36. We found the discount rate and
terminal growth rate assumptions were in an acceptable range, and that the other significant assumptions were
supported by comparison to the sources we considered.
For the Australian CGU and Anlene, our scenario analysis indicated that limited headroom exists over the carrying
amount of these assets and that adverse movements in key assumptions could have resulted in impairment.
We consider the impairment disclosures to be a fair reflection of the underlying impairment tests.
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THE KEY AUDIT MATTERHOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Held for sale and discontinued operations
Refer to Note 2 to the financial statements.
On 31 July 2025, the Group classified the ‘Consumer and associated businesses’ disposal group
as held for sale and recognised the related operations as discontinued. We considered the
classification of the disposal group as held for sale and a discontinued operation at 31 July 2025
to be a key audit matter due to:
–the magnitude of impact of the classification of the disposal group as held for sale and a
discontinued operation on the financial statements. Net assets of $2.8 billion have been
reclassified to held-for-sale, representing 34% of the Group’s net assets;
–the level of judgement involved in determining at the balance date whether the disposal
group is available for immediate sale in its present condition and its sale is highly probable of
being completed within the next 12 months;
–the level of judgment in determining whether the disposal group represents a discontinued
operation of the Group; and
–the level of judgement and estimates involved in determining the allocation of shared assets
to held for sale and the separation of items of profit and loss between continuing and
discontinued operations.
Our audit procedures included:
–assessing managements technical analysis concluding the disposal group was held for sale at the balance date.
This included ensuring the binding offers had been obtained for the perimeter of the Group being marketed by
management, at prices that were within the valuation range determined for the disposal group. We inquired
with the executive management responsible for the transaction, reviewed the active trade sale programme, and
reviewed management papers to the directors of the Group in order to evaluate their commitment at the balance
date to the sale of the disposal group to one of the bidders and execution of the transaction within 12 months. We
considered outstanding matters required to separate the disposal Group and complete the transaction to assess
whether they are usual and customary and would not impede the completion of the transaction. We considered
shareholder polling results and the economics of the transaction to evaluate managements assumption that there
is sufficient shareholder support at the balance date to approve the transaction;
–assessing managements technical analysis concluding the disposal group represents a discontinued operation of
the Group as defined by NZ IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. This included
assessing the perimeter of the disposal group ensuring it comprised operations and cashflows that can be clearly
distinguished operationally and for financial reporting purposes from the Group;
–evaluating whether the assets and liabilities of the disposal group had been appropriately combined and recognised
as held for sale, including challenging the appropriateness of assumptions underlying the allocation of certain
assets. Additionally, evaluating the split of income and expenses between continuing and discontinued operations,
considering relationships that will continue with the new owner of the disposal group after its disposal;
–evaluating binding offers ensuring the disposal group is recognised at the lower of its carrying amount and fair
value less costs of disposal; and
–evaluating the presentation of the disposal group as held for sale and discontinued operations in consolidated
financial statements of the Group, including the completeness of related disclosures and restatement of
comparative information for discontinued operations.
The disposal group has been appropriately classified as held for sale and a discontinued operation at the balance date.
The allocation of assets and liabilities to held for sale reflects the perimeter of the disposal group, and income
and expenses relating to the disposal group have been appropriately presented between continuing and
discontinuing operations.
The disposal group is appropriately measured at the lower of its carrying amount and fair value less cost of disposal.
The disposal group has been appropriately presented in the consolidated financial statements of the Group.
Independent Auditor’s Report continued
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Independent Auditor’s Report continued
Other information
The Directors, on behalf of the Company, are responsible for the other information. The other
information comprises information included in the Annual Report but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover any other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the
other information and in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit or otherwise
appears materially misstated.
If, based on the work we have performed, we conclude there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit 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 report and for no other purpose. To the fullest extent permitted
by law, none of KPMG, any entities directly or indirectly controlled by KPMG, or any of their respective
members or employees, accept or assume any responsibility and deny all liability to anyone other
than the shareholders for our audit work, this independent auditor’s report, or any of the opinions
we have formed.
Responsibilities of the Directors for the consolidated financial statements
The Directors, on behalf of the Company, are responsible for:
–the preparation and fair presentation of the consolidated financial statements in accordance with
NZ IFRS issued by the New Zealand Accounting Standards Board and IFRS Accounting Standards
issued by the International Accounting Standards Board;
–implementing the necessary internal control to enable the preparation of a consolidated set of
financial statements that is free from material misstatement, whether due to fraud or error; and
–assessing the ability of the Group to continue as a going concern. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless
they either intend to liquidate or to cease operations or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objective is:
–to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error; and
–to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but it is not a guarantee that an audit conducted
in accordance with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of the consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements
is located at the External Reporting Board (XRB) website at:
https://www.xrb.govt.nz/standards/assurance-standards/auditors-responsibilities/audit-report-1-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor’s report is Aaron Woolsey.
For and on behalf of:
KPMG
Auckland
24 September 2025
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NOTES20252024
1
ASSETS
Current assets
Cash and cash equivalents309540
Trade and other receivables 17b,191,4622,123
Inventories94,2044,405
Derivative financial instruments 294282
Other assets 137389
Assets held for sale2a3,8153
Total current assets10,1577,442
Non-current assets
Inventories96853
Property, plant and equipment115,5956,400
Intangible assets128181,785
Deferred tax assets16b113208
Derivative financial instruments364344
Other assets 13411447
Total non-current assets7,3699,237
Tot al a s s e t s17,52616,679
Statement of Financial Position
AS AT 31 JULY
($ MILLION)
NOTES20252024
1
LIABILITIES
Current liabilities
Bank overdraft3042
Borrowings64701,032
Trade and other payables 10,17b4,1934,196
Tax payable391107
Derivative financial instruments157362
Other liabilities14149108
Liabilities held for sale2a969–
Total current liabilities 6,3595,847
Non-current liabilities
Borrowings62,6682,356
Derivative financial instruments 6590
Deferred tax liabilities16b34135
Other liabilities146276
Total non-current liabilities 2,8292,657
Total liabilities9,1888,504
Net assets8,3388,175
EQUITY
Subscribed equity45,0645,064
Retained earnings3,0012,960
Foreign currency translation reserve20a158127
Hedge reserves20a11(72)
Other reserves1120
Non-controlling interests9376
Total equity8,3388,175
1 Comparative information includes re-presentations for consistency with the current period.
The Board approved and authorised for issue these Financial Statements on 24 September 2025.
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 YEAR ENDED 31 JULY
($ MILLION)
NOTES20252024
1
Revenue from sale of goods124,11120,423
Cost of goods sold:
New Zealand sourced cost of milk(15,326)(11,679)
Non-New Zealand sourced cost of milk(40)(16)
Other collection and manufacturing costs(6,245)(5,832)
Increase in inventories78599
Total cost of goods sold
2
3a(20,826)(17,428)
Gross profit3,2852,995
Other operating income10482
Foreign exchange gains911
Operating expenses3a(1,838)(1,746)
Net finance costs7(184)(156)
Profit before tax from continuing operations1,3761,186
Tax expense16(372)(139)
Profit after tax from continuing operations1,0041,047
Profit after tax from discontinued operations2b7581
Profit after tax1,0791,128
Cash flow hedges and other costs of hedging, net of tax20a83(115)
Net investment hedges and translation of foreign operations, net of tax20a3852
Foreign currency translation reserve (losses)/gains transferred to profit or loss2b,20a(7)68
Total items that may be reclassified subsequently to profit or loss1145
Total items that will not be reclassified subsequently to profit or loss(4)7
Total other comprehensive income11012
Total comprehensive income1,1891,140
Earnings per share attributed to equity holders of the Co-operative
Basic and diluted earnings per share from continuing operations ($)0.600.63
Basic and diluted earnings per share from discontinued operations ($)0.050.04
Total basic and diluted earnings per share ($)0.650.67
Weighted average number of shares (thousands of shares)1,606,8951,607,734
1 Comparative information includes re-presentations for consistency with the current period.
2 This Statement is presented on a functional basis. The shaded information provides an additional breakdown of cost of goods sold by nature of expense.
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Statement of Cash Flows
FOR THE YEAR ENDED 31 JULY
($ MILLION)
NOTES20252024
1
Cash flows from operating activities
Profit after tax1,0791,128
Adjustments for:
Net finance costs184164
Tax expense467235
Depreciation and amortisation635627
(Gain)/loss on sale of businesses(8)66
Other7070
Total adjustments1,3481,162
(Increase)/decrease in working capital and other operating
activities15(376)112
Net taxes paid(91)(89)
Net cash flows from operating activities1,9602,313
Cash flows from investing activities
Proceeds relating to divestments2b8–
Acquisition of property, plant and equipment (650)(577)
Acquisition of intangible assets(50)(73)
Acquisition of investments(20)(73)
Other cash outflows–(32)
Other cash inflows1444
Net cash flows from investing activities(698)(711)
NOTES20252024
1
Cash flows from financing activities
Proceeds from borrowings5,5482,895
Other cash inflows288
Repayment of borrowings(5,744)(3,806)
Capital return paid4–(804)
Dividends paid(1,026)(925)
Interest paid(197)(218)
Share buyback–(4)
Net cash flows from financing activities(1,391)(2,854)
Net decrease in cash(129)(1,252)
Opening cash 4981,750
Effect of exchange rate changes4–
Closing cash 373498
Reconciliation of closing cash to the Statement
of Financial Position
Cash and cash equivalents309540
Bank overdraft(30)(42)
Cash balances included in assets and liabilities held for sale2a94–
Closing cash373498
1 Comparative information includes re-presentations for consistency with the current period.
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Statement of Changes in Equity
FOR THE YEAR ENDED 31 JULY
($ MILLION)
ATTRIBUTABLE TO EQUITY HOLDERS OF THE CO-OPERATIVE
NOTES
SUBSCRIBED
EQUITY
RETAINED
EARNINGS
FOREIGN
CURRENCY
TRANSLATION
RESERVE
1
HEDGE
RESERVES
1
OTHER
RESERVES
1
NON-
CONTROLLING
INTERESTS
TOTAL
EQUITY
As at 1 August 20245,0642,960127(72)20768,175
Profit after tax–1,038–––411,079
Other comprehensive income––3183(9)5110
Total comprehensive income–1,0383183(9)461,189
Transactions with equity holders:
Dividends paid5–(997)–––(29)(1,026)
As at 31 July 20255,0643,0011581111938,338
As at 1 August 20235,0732,7747439627,968
Profit after tax–1,074–––541,128
Transfer between reserves–(4)––4––
Other comprehensive income––120(115)7–12
Total comprehensive income–1,070120(115)11541,140
Transactions with equity holders:
Dividends paid5–(884)–––(41)(925)
Dairy Partners Americas Brasil Limitada capital contributions received–––––88
Derecognition of non-controlling interest in Dairy Partners Americas Brasil Limitada–––––(7)(7)
Share buyback4(9)–––––(9)
As at 31 July 20245,0642,960127(72)20768,175
1 Comparative information includes re-presentations for consistency with the current period.
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Basis of Preparation
FOR THE YEAR ENDED 31 JULY 2025
AT A GLANCE
The basis of preparation describes changes in material accounting policies and significant
judgements and estimates that are relevant to the Group’s Financial Statements as a whole.
Where a policy, judgement or estimate is specific to a particular Note, it is included in the Note
to which it relates.
a) About Fonterra
Fonterra Co-operative Group Limited (Fonterra, the Company or the Co-operative) is a multinational
dairy co-operative. Fonterra is primarily involved in the collection, manufacture and sale of milk and
milk-derived products through its Ingredients, Consumer and Foodservice channels. At 31 July 2025
the Group’s Consumer and associated businesses were classified as a disposal group held for sale,
which is described throughout these Financial Statements, in particular in Note 2 Divestments.
Fonterra is incorporated and domiciled in New Zealand. Fonterra is registered under the Companies
Act 1993 and the Co-operative Companies Act 1996, and is an FMC Reporting Entity under the Financial
Markets Conduct Act 2013. Fonterra is also required to comply with the Dairy Industry Restructuring
Act 2001 (DIRA).
b) Basis of preparation
These Financial Statements comprise Fonterra and its subsidiaries (together referred to as the Group)
and the Group’s interests in its equity accounted investments.
These Financial Statements:
–Comply with International Financial Reporting Standards (IFRS Accounting Standards);
–Comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS
Accounting Standards);
–Have been prepared in accordance with Generally Accepted Accounting Practice (GAAP) applicable
to for-profit entities;
–Have been prepared on a historical cost basis except where otherwise stated. Assets and liabilities
measured at fair value are summarised in Note 18 Fair value measurement; and
–Are presented in New Zealand Dollars ($ or NZD), which is Fonterra’s functional currency, and rounded
to the nearest million, except where otherwise stated.
Re-presentations
At 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, Note 22 Subsidiaries and Note 23 Re-presentations for further information.
–As the Consumer and associated businesses were classified as a disposal group held for sale during the
current reporting period, associated amounts are presented in assets held for sale and liabilities held
for sale in the Statement of Financial Position at 31 July 2025, and comparative amounts have not been
re-presented.
In addition, at each balance date the Group assesses the aggregation and disaggregation of individual
line items. For the current year, reserves have been disaggregated into foreign currency reserve, hedge
reserve and other reserves. Comparative information has been re-presented for consistency with the
current period.
c) Basis of consolidation
In preparing these Financial Statements, subsidiaries are consolidated from the date the Group gains
control until the date on which control ceases. The Group’s share of results of equity accounted
investments are included in the Financial Statements from the date that significant influence or joint
control commences, until the date that significant influence or joint control ceases. All transactions with
subsidiaries are eliminated.
Translation of the Financial Statements into NZD
The assets and liabilities of Group companies whose functional currency is not NZD are translated into
NZD at the year-end exchange rate. The revenue and expenses of these companies are translated into
NZD at rates approximating those at the dates of the transactions. Exchange differences arising on this
translation that are attributable to equity holders of the Co-operative are recognised in the foreign
currency translation reserve. On disposal or partial disposal of an entity, the related exchange differences
that were recorded in equity are recognised in profit or loss as part of the gain or loss on disposal.
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Basis of Preparation continued
FOR THE YEAR ENDED 31 JULY 2025
d) Material accounting policies
Accounting policies which are considered material to an understanding of the Financial Statements
are provided throughout the notes in blue shading.
New and amended accounting standards
No new or amended standards and interpretations that became effective for the year ended 31 July 2025
have had a material impact to the Group.
Accounting standards issued but not yet effective
NZ IFRS 18 Presentation and Disclosure in Financial Statements is effective for the year ending 31 July 2028
and will impact the presentation of the Statement of Profit or Loss and Other Comprehensive Income,
with an allocation of income and expenses between operating, investing and financing categories, and
new sub-totals such as operating profit. Financial performance measures used to explain the Group
financial performance in public communications outside the financial statements will also be required
to be disclosed, and there is enhanced guidance on the aggregation and disaggregation of information.
The Group has made a preliminary assessment of the scope of changes. The detailed impact assessment
is yet to be completed.
There are no new or amended standards that are issued but not yet effective that are expected to have
a material recognition or measurement impact to the Group.
e) Significant judgements and estimates
In the preparation of these Financial Statements, a number of judgements and estimates have been
made. Accordingly, actual outcomes may differ to these estimates.
Information about judgements, estimates and assumptions which are considered material to an
understanding of the Financial Statements are provided in the following notes in grey shading.
NOTEITEM INVOLVING SIGNIFICANT JUDGEMENT OR ESTIMATION
Note 1 Segment reporting
and revenue
Revenue recognition for transactions involving distributors
Note 2DivestmentsDetermining if a disposal group is held for sale and
discontinued operations
Note 11Property, plant and
equipment
Determining residual values and useful lives
Note 12Intangible assetsAssumptions used in the impairment tests
f) Climate-related uncertainties
Climate change, Fonterra’s response, and how farmer shareholders, customers, regulators and others also
respond may have significant impacts on the recognised amounts of assets and liabilities.
The Group has a number of climate-related targets, including:
–Reducing its global absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 50.4% by financial year
(FY) 2030 (from a FY2018 base year); and
–Reducing its Scope 1 and 3 Forest, Land and Agriculture (FLAG) GHG emissions from dairy by 30%
per tonne of fat and protein corrected milk (FPCM) by FY2030 (from a FY2018 base year).
The Group has also committed to exiting coal by FY2037.
While the effects of climate change are a continuing source of uncertainty, climate-related risks and
opportunities have been assessed as not having a material impact to the Financial Statements for the
year ended 31 July 2025.
Judgements and estimates
The Group has specifically considered the following areas of uncertainty:
Estimated useful lives of property, plant and equipment
The Group revisits the appropriateness of useful life estimates annually as described in Note 11 Property,
plant and equipment, and has taken into account decarbonisation plans, for example coal boiler assets
that will no longer be used following decarbonisation are expected to be fully depreciated by 2037.
Recoverable amounts of assets - impairment assumptions
The Group performs impairment reviews as described in Note 12 Intangible assets, and although there
have been impairments recognised in the current year, these are not explicitly related to climate change
and are attributed to the estimates and assumptions for each cash generating unit as described in
Note 12 Intangible assets.
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 JULY 2025
NOTEFS PAGE
Performance
1Segment reporting and revenue132
2Divestments137
3Profit before tax from continuing operations139
Debt and Equity
4Subscribed equity instruments141
5Dividends143
6Borrowings143
7Net finance costs144
8Capital management145
Assets and Liabilities
9Inventories146
10Trade and other payables147
11Property, plant and equipment147
12Intangible assets149
13Other assets152
14Other liabilities153
Other
15Net movement in working capital and other operating activities154
16Taxation154
17Related party transactions156
18Fair value measurement158
19Financial risk management159
20Hedge accounting165
21Offsetting of financial assets and liabilities174
22Subsidiaries175
23Re-presentations176
Michael, Southland
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Notes to the Financial Statements continued
FOR THE YEAR ENDED 31 JULY 2025
($ MILLION)
Performance
This section focuses on the Group’s financial performance and the returns provided to equity holders.
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 Global Markets (excluding the Consumer and associated
businesses), Greater China, and Core Operations.
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 has been
excluded from the disclosures in this note (31 July 2024: the Consumer and associated businesses, and the
Brazil consumer and foodservice businesses up until the date of its sale). Please see Note 2 Divestments
for further information about the Group’s discontinued operations.
a) Reportable segments
Operating segments reflect the way financial information is regularly reviewed by the Fonterra
Management Team (FMT). The FMT is considered to be the Chief Operating Decision Maker (CODM).
At 31 July 2025, the FMT consists of the Group’s Chief Executive Officer (CEO), Chief Financial Officer,
Chief Operating Officer, the President Global Markets - Ingredients, the CEO Greater China (who is also
the President Global Foodservice), 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 Managing Director M&A and Strategic Divestments FMT role was created effective
March 2025 to lead the divestment of the Consumer and associated businesses.
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).
At 31 July 2025, the previous Global Markets - Ingredients and Global Markets - Consumer and
Foodservice business units (as presented in the 31 January 2025 Interim Financial Statements) have
been recombined into one Global Markets business unit, excluding the Consumer and associated
businesses. This reflects the previous Managing Director Global Markets - Consumer and Foodservice’s
appointment as CEO-elect of Mainland Group during the year and their withdrawal from the FMT.
The Group’s operating model and the way financial information is presented to the FMT has been
updated to align to this new organisational structure. This is now based around the two customer-facing
regional business units, Global Markets and Greater China, and Core Operations which comprises:
–Core operating functions which includes New Zealand milk collection, processing operations and assets,
and Supply Chain;
–The physical and financial commodity portfolio management function which includes 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; and
–Fonterra Farm Source™ retail stores.
Corporate Services costs including Innovation and Brand, Group IT and Co-operative Affairs are allocated
to Global Markets, Greater China and Core Operations.
The operating model forms the basis for the Group’s operating segments.
The Group has identified its reportable segments based on a number of factors, including how the CODM
makes decisions about resource allocations and assesses performance. The Group has determined
that its reportable segments are Global Markets, Greater China and Core Operations at 31 July 2025.
Comparative information within this note has been restated to reflect the change in the Group’s
reportable segments.
REPORTABLE SEGMENTSDESCRIPTION
Global MarketsRepresents the global Ingredients, Foodservice and residual Consumer
channels outside of Greater China.
Greater ChinaRepresents the Ingredients, Foodservice and Consumer channels in
Greater China.
Core OperationsRepresents core operating functions, the physical and financial commodity
portfolio management function and Fonterra Farm Source™ retail stores.
In March 2025, Fonterra announced changes to its FMT aligned with a channel-led structure, effective
from 1 August 2025. Two new FMT roles were created to lead the Group’s global Foodservice and
Ingredients businesses effective 1 August 2025, the President Global Foodservice and the President
Global Ingredients. The President Global Foodservice is a dual role held by the CEO Greater China.
The President Global Ingredients replaces the President Global Markets - Ingredients FMT role.
The performance of large multinational customers are reported within the reportable segment that
they are managed by. This can differ from the geographical region of the destination of goods sold.
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Notes to the Financial Statements continued
FOR THE YEAR ENDED 31 JULY 2025
($ MILLION)
1 Segment reporting and revenue continued
a) Reportable segments continued
The performance of the Group’s reporting 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 services costs are included in the transfer price.
External revenue presented in the following tables is determined in accordance with the accounting policy, estimates and judgements set out below. 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.
YEAR ENDED 31 JULY 2025
CONTINUING OPERATIONS
GLOBAL
MARKETS
GRE ATER
CHINA
CORE
OPERATIONSELIMINATIONSTOTAL
Revenue from sale of goods14,3547,96420,430(18,811)23,937
Cost of goods sold(13,172)(7,170)(19,240)18,811(20,771)
Gross profit1,1827941,190–3,166
Operating expenses(524)(383)(931)–(1,838)
Other
1
69143–113
Normalised segment EBIT727412302–1,441
Add normalisation adjustment
2
119
Continuing operations EBIT727412302–1,560
Other segment information:
–External revenue
Ingredients channel revenue12,5054,54832–17,085
Foodservice channel revenue
3
1,4873,387(189)–4,685
Total continuing external revenue13,9927,935(157)–21,770
–Inter-segment revenue3622918,420(18,811)–
–Continuing revenue from discontinued operations––2,341–2,341
Continuing operations revenue14,3547,96420,604(18,811)24,111
–Depreciation and amortisation(59)(26)(447)–(532)
–Share of profit of equity accounted investees 13–(3)–10
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 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, and excluded from segment results in this table.
3 Comprises Foodservice and residual Consumer revenues.
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Notes to the Financial Statements continued
FOR THE YEAR ENDED 31 JULY 2025
($ MILLION)
a) Reportable segments continued
YEAR ENDED 31 JULY 2024
4
CONTINUING OPERATIONS
GLOBAL
MARKETS
GRE ATER
CHINA
CORE
OPERATIONSELIMINATIONSTOTAL
Revenue from sale of goods12,5136,36916,977(15,556)20,303
Cost of goods sold(11,388)(5,493)(16,074)15,556(17,399)
Gross profit1,125876903–2,904
Operating expenses(545)(375)(826)–(1,746)
Other
1
53238–93
Normalised segment EBIT633503115–1,251
Add normalisation adjustment
2
91
Continuing operations EBIT633503115–1,342
Other segment information:
–External revenue
Ingredients channel revenue10,9613,59382–14,636
Foodservice channel revenue
3
1,2422,771(132)–3,881
Total continuing external revenue12,2036,364(50)–18,517
–Inter-segment revenue310515,241(15,556)–
–Continuing revenue from discontinued operations––1,906–1,906
Continuing operations revenue12,5136,36917,097(15,556)20,423
–Depreciation and amortisation(54)(24)(443)–(521)
–Share of profit/(loss) of equity accounted investees 7(2)(6)–(1)
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 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, and excluded from segment results in this table.
3 Comprises Foodservice and residual Consumer revenues.
4 Comparative information includes re-presentations for consistency with the current period.
1 Segment reporting and revenue continued
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Notes to the Financial Statements continued
FOR THE YEAR ENDED 31 JULY 2025
($ MILLION)
b) Revenue
The Group recognises revenue from the sale of products when control of the products transfers
to the customer. The transfer of control of products typically occurs at the following times:
–Ingredient products (export sales) – once the products are loaded onto the ship.
–Ingredient products (domestic sales) – on delivery of the products to the customer’s
designated location.
–Consumer and foodservice products – on delivery of the products to the customer’s
designated location.
The amount of revenue recognised reflects the consideration that the Group expects to be entitled
to for providing the products to the customer. Revenue is measured as the sales price specified in
the contract adjusted for pricing adjustments, trade spend and rebates. Pricing adjustments, trade
spend and rebates are recognised as deductions from revenue at the time that the related sale is
recognised. The estimated amount of the deduction from revenue is based on historical experience
and the specific terms of the contracts with customers so that it is highly probable that a significant
reversal of revenue recognised will not occur.
For export sales the Group sells a significant proportion of its products on terms that include
freight and insurance to the destination port. For these sales the Group has a separate
performance obligation to arrange freight and insurance services for the customers after the date
at which control of the products passes to the customer. As the Group does not control the freight
and insurance services before those services are transferred to the customer, the Group is acting
as an agent. Therefore, the Group recognises the net agency fee as revenue when freight and
insurance services are made available to customers, usually this is when the products are loaded
onto the ship.
The Group offers credit terms which are short-term in nature. In addition, as part of its normal trade
terms, the Group receives payments in advance from certain customers. Contracts with customers
do not contain significant financing components.
The Group sells products either directly to customers or through distributors. For transactions
involving distributors, judgement is required to assess whether:
–Control of the products passes and therefore revenue is recognised when the products are
transferred to the distributor, in which case the distributor is the Group’s customer; or
–The Group retains control of the products after transfer to the distributor, in which case control
of the products does not pass until the products reach the customer in the supply chain who
does obtain control of the product. In this situation the customer, referred to as the ‘end
customer’ may be a retailer, reseller or food manufacturer. Revenue is not recognised until the
products are transferred to the end customer.
The assessment of whether control of the products passes to the distributor can involve significant
judgement. In assessing control, the following indicators are considered:
–The ability to direct the use of the product. This includes consideration of who has the primary
responsibility for providing the products to the end customer and whether the Group can restrict
who the distributor sells the product to.
–The transfer of inventory risk and demand risk. This includes consideration of the level of, or
allowance for, product returns and who bears the residual risk of product expiry.
–The level of support provided by the Group to assist the distributor to on-sell the product. This
includes consideration of collaboration on marketing plans, financial support provided by the
Group through pricing discounts or funding of promotional activity.
Sales to distributors where significant judgement is involved in determining the timing of revenue
recognition are primarily in the Foodservice channel.
Contractual terms vary across markets and sales channels. In most arrangements the contractual
terms indicate that the distributor is responsible for providing the products to the end customer
and has assumed the inventory risk. The Group often retains price risk through the provision of
price discounts, funding promotional activity or influence over price setting. In general, these
pricing mechanisms impact the amount of revenue recognised by the Group rather than indicating
control of the products is retained.
In order to conclude on the transfer of control of the products the contract must be assessed in its
entirety, along with implied contractual terms based on commercial customary practices.
1 Segment reporting and revenue continued
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Notes to the Financial Statements continued
FOR THE YEAR ENDED 31 JULY 2025
($ MILLION)
b) Revenue continued
In addition to the segment and channel revenue set out above, revenue is also presented by geography on the basis of the destination of the goods sold. Geographical groupings in the following table are not aligned
with the Group’s reportable segments.
GEOGRAPHICAL EXTERNAL REVENUE
ASIA
(EXCLUDING CHINA)CHINANEW ZEALANDAMERICASREST OF WORLDTOTAL
Year ended 31 July 20259,1017,1311,3322,5451,66121,770
Year ended 31 July 2024
1
7,8655,6291,2932,3241,40618,517
1 Comparative information includes re-presentations for consistency with the current period, primarily to exclude the Consumer and associated businesses presented as discontinued operations.
c) Geographical analysis of non-current assets
Geographical groupings in the following table are not aligned with the Group’s reportable segments.
GEOGRAPHICAL NON-CURRENT ASSETS
ASIA
(EXCLUDING
CHINA)CHINANEW ZEALANDAMERICASAUSTRALIAREST OF WORLDTOTAL
As at 31 July 2025422335,8915–1556,506
As at 31 July 2024732216,35739701808,263
RECONCILIATION OF GEOGRAPHICAL NON-CURRENT ASSETS TO TOTAL NON-CURRENT ASSETS20252024
Geographical non-current assets 6,5068,263
Deferred tax assets113208
Derivative financial instruments 364344
Other financial instruments386422
Total non-current assets7,3699,237
1 Segment reporting and revenue continued
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Notes to the Financial Statements continued
FOR THE YEAR ENDED 31 JULY 2025
($ 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.
At 31 July 2025, the Consumer and associated businesses met the criteria to be classified as held for sale
and as a discontinued operation which is described further in this note.
The Group completed the sale of the Brazil consumer and foodservice business during the year ended
31 July 2024.
a) Disposal groups held for sale and divestments
A disposal group is a group of assets and liabilities to be disposed of (by sale or otherwise) in a
single transaction. A disposal group is classified as held for sale if it is available for immediate sale
in its present condition and its sale is highly probable.
Disposal groups classified as held for sale are measured at the lower of their carrying amount
and fair value less costs to sell. Immediately prior to being classified as held for sale, the carrying
amounts of assets and liabilities in the disposal group are measured in accordance with the
applicable accounting policy. Impairment losses on initial classification as held for sale and
subsequent gains and losses on remeasurement are recognised in profit or loss.
[TRUNCATED]

Fonterra’s 2025 Annual Results Briefing Details Fonterra releases materials for Special Meeting in October

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