Fonterra's earnings in the nine months to April fell by 20 per cent due to disruption in its key markets of China and Sri Lanka, and the war in Ukraine.

The co-op pitched its farmgate milk price range for the 2022/23 season at $8.25 to $9.75 per kg of milksolids - with a mid-point of $9.00 per kg.

For the 2021/22 season, Fonterra maintained its 2021/22 forecast milk price of $9.10 - $9.50 per kg.

"At a midpoint of $9.30 per kgMS, this would be the highest forecast milk price in the co-op's history and would see us contribute almost $14 billion into the New Zealand economy through milk price payments," chief executive Miles Hurrell said.

Fonterra's sales volumes were down as a result of lower milk collections and the timing of sales due to short-term impacts on demand, including the lockdowns in China, the economic crisis in Sri Lanka and the Russia-Ukraine war.

Total group normalised EBIT were $825m, down $134m, reflecting lower sales volumes, continued pressure on margins from the significantly higher milk price, on-going Covid-19 disruptions, and the rapid decline of the Sri Lankan Rupee.

This was also reflected in Fonterra's normalised profit after tax of $472m, down 20 per cent, the co-op said.

For the current financial year, Fonterra has retained its earnings per share guidance of 25-35 cents per share.

Hurrell said the opening forecast reflected continued demand for dairy, coupled with constrained global supply.

"The long-term outlook for dairy remains positive, despite recent geopolitical and Covid-19 related events impacting global demand in the short-term," he said.

On the supply side, growth from key milk producing regions was expected to remain constrained as high feed, fertiliser and energy costs continued to impact production volumes.

"These demand and supply dynamics are expected to support dairy prices in the medium to long-term," he said.

The co-op continued to deliver a strong milk price and solid earnings.

Earnings by region

AMENA ( Europe, Middle East & Africa, North Asia and the Americas) delivered normalised EBIT of $406m, up 30 per cent, due to improved gross margins in Fonterra 's Ingredients channel, and a strong performance from the Chilean business.

In Greater China, Ingredients continued to benefit from increased sales of higher margin products.

However, normalised EBIT was down 17 per cent to $317m, due to continued pressure on our margins from the higher milk price, particularly in Foodservice, as well as the Covid-19 lockdowns.

Hurrell expected the impact of the lockdowns to show up in the fourth quarter results.

Aside from some supermarkets, all restaurants and other food outlets were closed in Shanghai in early April to contain the Omicron outbreak.

While restrictions have started to ease, a number of food outlets remain closed, while other cities across China are facing Covid-19 restrictions.

"The impacts of this, and the disruptions to supply chains, have been felt across the market and is reflected in our Greater China sales volumes which are down on the same time last year.

APAC's (the wider Pacific, South and East Asia region) normalised EBIT was down 43 per cent to $177m.

While our Australian business and Ingredients channel continued to perform well, this was more than offset by the economic challenges in Sri Lanka, margin pressure from the higher milk price and other Covid-19 related issues.

"While historically a good business for us, the significant deterioration of economic conditions in Sri Lanka has seen the rapid devaluation of the Sri Lankan rupee against the US dollar.

"This means it takes more Sri Lankan rupee to pay for product purchased from New Zealand, which is sold in US dollars, and has resulted in an $81 million adverse revaluation of our Sri Lankan business payables owing to New Zealand.

"This has been reflected in our normalised EBIT, which may continue to vary as Sri Lanka's currency fluctuates."

Hurrell said the co-op was continuing its ownership review of its Australian business and the divestment process for the Chilean business, Soprole, was underway.

The co-op plans to return around $1b of capital to shareholders by 2024.