Key Highlights

  • Revenue Growth: Total Group revenue rises to NZ $13.9 billion, up NZ $1.3 billion from last year.
  • Profit and Dividends: Operating profit reaches NZ $1,231 million, profit after tax NZ $750 million; interim dividend 24 cents per share and special Mainland dividend 16 cents per share, fully imputed.
  • Farmgate Milk Price & Outlook: Forecast Farmgate Milk Price lifted to NZ $9.70 per kgMS midpoint; full-year earnings guidance for continuing operations increased to 50–65 cents per share.

Fonterra Co-operative Group Ltd (NZX:FCG) has reported a solid start to FY26, delivering strong revenue growth and improved profitability. Total Group revenue reached NZ $13.9 billion for the first half, up NZ $1.3 billion year-on-year, while operating profit rose to NZ $1,231 million. Profit after tax increased to NZ $750 million, representing earnings per share of 45 cents, with normalised EPS at 51 cents. Reflecting the Co-op’s robust margins, cost control, and resilient operations despite challenging weather conditions, the interim dividend of 24 cents per share and a special Mainland dividend of 16 cents per share will be paid in April.

The Farmgate Milk Price midpoint has been revised up to NZ $9.70 per kgMS, with milk collections projected to grow 4% to 1,565m kgMS. Fonterra has also increased full-year earnings guidance for continuing operations to 50–65 cents per share, driven by strong performance in high-value ingredients and Foodservice channels. CEO Miles Hurrell highlights that while geopolitical tensions may affect supply chains and commodity prices, the Co-op’s scale, network resilience, and strategic focus position it well to navigate volatility while continuing to deliver value to farmers and shareholders.

Business Performance

Fonterra’s operational results were underpinned by record milk flows in New Zealand, particularly in the South Island, despite adverse weather impacting processing operations. Operating profit climbed to NZ $1,231 million from NZ $1,107 million last year, with profit after tax of NZ $750 million. Return on capital for continuing operations reached 11.2%, comfortably within the 10–12% target range. The Ingredients division achieved an 11% return on capital, while Foodservice recorded 12.6%, reflecting strong pricing recovery and high-value product allocation.

Mainland Group performance improved due to favorable commodity cycles, supporting the special dividend payout. Fonterra attributes its strong half-year results to operational resilience, efficient allocation of milk solids, and ongoing cost discipline. These results underscore the Co-op’s ability to balance growth and profitability, ensuring both farmers and shareholders benefit from improved margins and strategic portfolio management.

Strategic Progress and Outlook

Fonterra continues to execute its strategy to become a leading global B2B dairy nutrition provider. The sale of Mainland Group to Lactalis for NZ $4.22 billion is on track for completion at the end of March 2026, with proceeds returned to shareholders alongside dividends. Investments in New Zealand manufacturing capacity remain a priority, including advanced protein facilities at Studholme, butter plant expansion at Clandeboye, new UHT cream at Edendale, and a pastry butter line at Edgecumbe. Decarbonisation initiatives are underway at key sites, reducing emissions while securing energy supply for future growth.

The Co-op is also advancing its Enterprise Resource Planning system across sites, with the programme expected to complete in late 2028. Despite potential volatility from the Middle East conflict and global commodity markets, Fonterra’s scale, logistics partnerships, and strategic focus on high-value products provide confidence in sustaining growth, meeting customer demand, and maximising returns for farmers and investors.

FAQs

What were Fonterra’s key financial results for HY26?

Total revenue reached NZ $13.9B, operating profit NZ $1,231M, profit after tax NZ $750M, with EPS of 45 cents.

What dividends did Fonterra announce?

Interim dividend of 24 cents per share and special Mainland dividend of 16 cents per share, both fully imputed.

What is Fonterra’s outlook for milk price and collections?

Farmgate Milk Price midpoint is NZ $9.70 per kgMS; forecast milk collections up 4% to 1,565m kgMS.