Wilson said challenges lay ahead in the second half arising from the higher than expected milk collection.
"The impact of more volatility in product stream returns in our ingredients business, some tightening of margins in the coming months, and the potential for extra milk in the autumn could result in some pressure on our earnings in the second half," he said.
"The board considered these factors and, while continuing to have confidence in achieving a target dividend of 40 cents per share, has revised the forecast earnings per share range to 45-55 cents to reflect the additional volatility."
Chief executive Theo Spierings said the first half result showed that Fonterra's strategy of moving more volume into higher value products was working.
"Our ingredients business maintained good margins. We made the most of our manufacturing capacity, and the flexibility it provides to match production to demand and secure the best returns for our farmers' milk," Spierings said.
The co-op's forecast available for payout is $6.45 to $6.55/kgMS for the 2016/7 year.
Fonterra said its ingredients business posted a normalised ebit $510m, down 17 per cent, while the consumer and food service reported normalised ebit of $313m, up 30 per cent.
Fonterra cut its net debt by $793m or 11 in the period. Its gearing ratio has fallen to 46.6 per cent compared with 49.2 per cent in the first half of 2016.
Better than expected weather has meant Fonterra now expects its milk collection this season to be down by 3 per cent instead of the previous forecast of a 7 per cent fall.
World dairy prices have continued to show signs of volatility, but Wilson said the fundamentals were sound. Fonterra expects pricing for the balance of the season to remain stable.
The co-op has a forecast cash payout for this season of $6.40/kgMS.
Wilson said the cash payout reflected a 54 per cent increase in the farmgate milk price compared to last season and consistent earnings.
