Fonterra says it is still on track to complete sale of its Mainland Group business in the first half next year, while reporting slightly reduced first quarter earnings

Giant dairy co-operative Fonterra is aiming for a shareholders' meeting on February 19 to approve a windfall payment of $3.2 billion from sale of its Mainland Group assets.

And in an update to the NZX on Thursday, Fonterra reported a slight dip in first quarter earnings, but said the year is off to a "solid start" and the co-op is maintaining its full year earnings range for continuing operations of 45-65 cents per share.

Last week Fonterra cut its forecast milk price for farmer shareholders for the current season to $9.50 from $10 after continuing falls in global dairy prices and rises in production.

At $9.50 per kilogram of milk solids, the farmgate milk price would still be a strong one, but would be below the record $10.16 price paid for the 2024-25 season.

Fonterra said some of the regulatory approvals required for the sale of Mainland Group to French company Lactalis have been obtained, including approval from the Overseas Investment Office in New Zealand which Lactalis confirmed they have received this week. Other regulatory approvals are still pending.

"Subject to these steps being achieved, Fonterra continues to expect the transaction to complete in the first half of the 2026 calendar year," Fonterra chief executive Miles Hurrell said.

"As previously shared, Fonterra is targeting a tax-free capital return of $2 per share to shareholders and unit holders, equivalent to around $3.2 billion, once the sale is complete."

Fonterra expects that the shareholder vote on the capital return will occur on 19 February 2026 and the notice of meeting to be issued by the end of January 2026.

"Holding the shareholder vote early in 2026 will enable the Co-op to return capital to shareholders and unit holders as soon as possible after the transaction is complete. If the capital return is approved by shareholders, Fonterra will then seek final Court approval to undertake the return of capital subject to the sale completing."

Hurrell said the co-op's total group profit after tax for Q1 is $278 million, up $15 million, and is equivalent to 17c per share.

"When excluding the costs associated with the consumer [Mainland] divestment, Fonterra’s normalised earnings per share are 18c, up slightly on last year.

"Continuing operations delivered a profit after tax of $158 million, equivalent to 9c per share, slightly down on the same period last year reflecting differences in sales phasing."

Hurrell said Fonterra was "firmly focused" on lifting earnings back to FY25 levels by FY28, offsetting the impact of the divestment of Mainland Group.

"To support this goal, we are progressing with plans to invest up to $1 billion over the next three to four years in projects to generate further value and drive operational efficiencies."

He said progress includes:

• In September, announcing a $75 million expansion of butter production at the Clandeboye site to help meet growing global demand and improve product mix.
• In November, the new Enterprise Resource Planning system went live at the first location and is on track to go live at the next locations during Q2.
• Construction is nearing completion on the $75 million investment in our Studholme protein hub, with the first products expected in early 2026.
• Construction continues on the $150 million investment in a new UHT cream plant at Edendale, which is expected to be complete in the second half of 2026.

"We look forward to sharing further progress updates during the year," Hurrell said.

This is the dairy industry payout history.