Fonterra is reporting an after-tax loss of $348 million in the first half to January 31, down 36 per cent.

However, board chairman John Wilson said the loss included a one-off Danone settlement and a write-down of the value of its Beingmate investment and its normalised profit is $248 million.

"While our reported net profit after tax shows a loss of $348 million, it includes the payment to Danone and the Beingmate impairment," Wilson said. "As these are one-off events, our normalised net profit after tax of $248 million is a better reflection of our underlying operating performance for the half year."

The-cooperative raised its farmgate milk price to $6.55/kg of milksolids from an earlier forecast of $6.40/kg.

For the full year to July 31, Fonterra forecast a total cash payout of $6.80 to $6.90.

It also announced a 10 cent interim dividend, compared with 20c in the previous comparable period.

The company said it had written down the value of its investment in Beingmate by $405 million to $244m. Beingmate, which develops and sells children's food and infant milk formula in China, in January downgraded its earnings for 2017 to a loss of $171–$214m.

"Our shareholders and unitholders will be rightfully disappointed with this outcome. Beingmate's continued under-performance is unacceptable," Wilson said.

The result also accounted for the $183 million settlement to French food company Danone after Fonterra's precautionary recall of whey protein in August 2013.

ASB economists said Fonterra had raised its farmgate forecast, as the bank had predicted.

"However, its half-year profits have taken a hit," the bank said.

Fonterra pointed to high inventory levels, low milk collections and higher input costs as contributing to the fall in profit.