Fonterra Lifts Profit Forecast as Milk Surges

Fonterra has lifted its profit forecast and narrowed next season's milk price range as strong demand offset global shipping disruption.

The dairy co-operative posted year-to-date operating profit of $1.8 billion, up $103 million on last year. Underlying earnings per share rose to 57 cents from 53 cents.

Fonterra lifted its full-year forecast earnings range to 60-70 cents per share, up from 50-65 cents, citing confidence in contracted sales and ability to navigate supply chain problems.

The forecast farmgate milk price for this season stays at $9.70 per kilogram of milk solids, but the range narrowed to $9.60-$9.80. For 2026/27, Fonterra opened with a forecast of $9.75 within a range of $8.00-$11.00.

Milk collections are up 4% this season to 1.489 billion kilograms of milk solids.

CEO Richard Allen said the result was strong despite global challenges. "Milk production is up considerably this season, and despite disruption in global supply chains, our sales book is well contracted and our shipping volumes are strong, with the highest third quarter shipment volumes in a decade," Allen said.

"As we look ahead to next season, we expect milk collections to remain high, in line with this season. Our in-market sales teams are anticipating solid demand from across the regions despite potential volatility, and this is reflected in our opening forecast range."

The ingredients business benefited from protein demand in the US and Europe, while foodservice achieved volume and margin growth.

Fonterra completed the $3.2 billion sale of Mainland Group during the quarter and is advancing major capital projects including a $35 million pastry butter facility at Edgecumbe and a $75 million protein hub at Studholme.

The co-operative will expand its organic programme to the South Island following strong farmer interest. The organic milk price forecast is $13.90-$14.10 per kilogram this season, with a record midpoint of $14.00.

Allen said the company was navigating Middle East conflict impacts and cost inflation. "We are confident that our deep relationships with customers and logistics partners will continue to help us navigate these challenges," Allen said.

Fonterra expects strong shipment volumes in the final quarter but acknowledged uncertainty from ongoing geopolitical risks and inflationary pressures affecting the 2026/27 season forecast range.