- Fonterra's earnings and milk collections rose as it focused on long-term value creation
- Interim dividend announced as product demand, performance and milk price forecasts all remain strong
- Chair and executive team named for potential IPO of Consumer business Mainland Group
Fonterra has reported a solid first-half performance for FY25, with earnings and milk collections both rising. The Co-operative’s operating profit reached NZ $1,107 million, up 16% on last year, while profit after tax climbed 8% to NZ $729 million. Earnings per share were 44 cents, and a 22-cent fully imputed interim dividend has been declared.
The forecast Farmgate Milk Price range for the season has narrowed slightly to between NZ $9.70 and $10.30 per kgMS, holding the midpoint at NZ $10.00. Forecast milk collections have risen 2.7% to 1,510 million kgMS.
Fonterra CEO Miles Hurrell said the result reflected the Co-op’s ongoing efforts to drive value and invest in its future. “We’re focusing on driving value which includes delivering strong financial performance while achieving the highest sustainable Farmgate Milk Price,” he said. He added that investment in manufacturing and sustainability projects was progressing well, with site upgrades underway at Studholme and Edendale, and decarbonisation work across multiple sites.
New initiatives include a coolstore being built at Whareroa and additional funding to support farmers producing lower-emissions milk. The Co-op has also expanded its Fixed Milk Price programme to provide farmers with more certainty.
Fonterra’s Ingredients business was a standout performer, with profits rising NZ $229 million to NZ $696 million despite a 3.9% drop in sales volumes. Its Foodservice channel also saw an 8.3% increase in volumes, delivering a profit of NZ $230 million. Consumer channel sales volumes grew 8.5%, with margins holding up well, resulting in a steady profit of NZ $173 million.
Fonterra’s digital transformation programme remains on track and within budget. The long-term Enterprise Resource Planning system upgrade is forecast to cost NZ $450–500 million, with peak spending of NZ $130 million expected this year.
Looking ahead, the full-year forecast earnings range has been increased to 55–75 cents per share, reflecting confidence in core business strength and resilience in the Consumer channel.
Meanwhile, Fonterra has named Liz Coutts ONZM as Chair-elect of Mainland Group, the entity proposed for the divestment of its global Consumer business. If the Mainland Group goes public through an IPO, she will serve as Non-Executive Chair.
This follows the earlier appointments of CEO-elect René Dedoncker and CFO-elect Paul Victor. Fonterra is currently reviewing offers from potential buyers and will consult its farmer shareholders before making a final decision on divestment.