Fonterra Co-operative Group has released its FY26 first-quarter business update, reporting a steady start to the financial year and continued focus on strategic delivery.

Chief Executive Miles Hurrell said Fonterra’s Total Group profit after tax reached $278 million, a $15 million increase from the same period last year. This equates to 17 cents per share. Normalised earnings per share, excluding Consumer business divestment costs, rose slightly to 18 cents.

Profit after tax from continuing operations came in at $158 million, down $10 million from Q1 FY25. Hurrell attributed the decrease to changes in sales phasing but confirmed the co-op is holding its full-year forecast for continuing operations at 45 to 65 cents per share.

“In October, farmer shareholders voted to approve the divestment of Mainland Group to Lactalis for $4.22 billion. This is a significant milestone and we’ve received a strong mandate from farmer shareholders on our strategy to grow value as a global B2B dairy provider,” said Hurrell.

Fonterra reiterated its goal to lift earnings back to FY25 levels by FY28, aiming to offset the impact of the divestment. To support this, it plans to invest up to $1 billion over the next three to four years in projects to boost value and drive efficiencies.

Key project updates include:

  • A $75 million expansion of butter production at the Clandeboye site, announced in September, to meet global demand.
  • The launch of a new Enterprise Resource Planning system, with more sites scheduled to go live in Q2.
  • Construction nearing completion on a $75 million protein hub at Studholme, with first products expected in early 2026.
  • Ongoing work on a $150 million UHT cream plant at Edendale, due for completion in the second half of 2026.

Fonterra has also adjusted its Farmgate Milk Price forecast range for the 2025/26 season to $9.00 - $10.00 per kgMS, with a midpoint of $9.50. This reflects strong global milk collections, prompting an upward revision in Fonterra’s forecast milk volumes from 1,525 million kgMS to 1,545 million kgMS.

Regarding the Mainland Group sale, Fonterra said several regulatory approvals have been secured, including clearance from New Zealand’s Overseas Investment Office. Other approvals are pending, but the transaction is still expected to complete in the first half of calendar 2026.

A capital return of $2 per share, equivalent to approximately $3.2 billion, is planned following the sale. Fonterra intends to hold a shareholder vote on 19 February 2026, with notice of meeting to be issued by the end of January 2026. If approved, final Court sign-off will follow to enable the capital return.

Share this article
The link has been copied!