Milk Payments Rise As Fonterra Grows Profit
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Fonterra has posted another solid year of financial performance, releasing its full-year FY25 results with $26 billion in revenue and record cash returns to shareholders of $16.2 billion. Operating profit rose by 13% to $1.73 billion, while profit after tax sat at $1.08 billion—down 4% due to tax changes, but up 13% on a tax-adjusted basis.
The final Farmgate Milk Price for the 2024/25 season was confirmed at $10.16 per kgMS, representing $15.3 billion in milk payments to New Zealand farmers—an increase of $3.8 billion compared to the previous season. Milk collections rose by 2.6% to 1,509 million kgMS.
A fully imputed dividend of 57 cents per share was declared, up from last year’s 55 cents (unimputed), with $916 million returned to shareholders and unit holders. CEO Miles Hurrell said FY25 was “one of the Co-op’s strongest years yet in terms of shareholder returns.”
“We continue to see good demand from global customers for our high-quality products made from New Zealand farmers’ milk,” said Mr Hurrell. “This is driving returns through both the Farmgate Milk Price and dividends.”
The company’s strategic direction remains focused on Ingredients and Foodservice. Fonterra announced a major step towards this goal through the sale of its global Consumer and associated businesses to Lactalis for $4.22 billion, subject to regulatory and shareholder approvals. A vote on the sale is scheduled for 30 October 2025.
“If the sale progresses, we’re targeting a capital return of $2.00 per share—equivalent to $3.2 billion,” said Mr Hurrell.
Looking forward, Fonterra forecast milk collections of 1,525 million kgMS for the 2025/26 season. The Farmgate Milk Price has a midpoint forecast of $10.00 per kgMS, within a range of $9.00 to $11.00.
FY26 earnings are expected to be between 45 and 65 cents per share, excluding the businesses under divestment. Mr Hurrell stated, “We’re targeting earnings to be back at current levels within three years.”
Investments continue across the Co-op, including protein expansion at Studholme, new UHT cream production at Edendale, and new butter and cream cheese facilities. Projects to replace core systems and modernise operations, including energy infrastructure, are also underway.
“Our ongoing balance sheet strength, combined with our focused strategic direction, means the Co-op is well prepared for the future and positioned to continue delivering positive returns to shareholders,” said Mr Hurrell.