Better product returns has seen Fonterra raise its current season payout forecast. Plus it will payout the Mainland earnings in a special dividend, additional to the capital return from the Lactalis transaction

Fonterra  today lifted its forecast Farmgate Milk Price for the 2025/26 season and narrowed its forecast range. 

The midpoint has increased from $9.00 per kgMS to $9.50 per kgMS, with the forecast range lifting and narrowing from $8.50-$9.50 per kgMS to $9.20-$9.80 per kgMS. 

This takes its payout level up to where analysts had already forecast. See this resource.

The Co-op said it has been able to make these changes based on recent improvements in global commodity prices combined with Fonterra’s well contracted sales book.

In addition they said it intends to pay out 100% of underlying earnings generated by Mainland Group while it is still under Fonterra ownership.

The earnings will be distributed through a special Mainland dividend payment to shareholders and unit holders following the completion of the sale to Lactalis.

The special Mainland dividend to be in the range of 14-18 cents per share, which reflects the operating performance of the Mainland business during the first half of this year driven by ongoing cost management and favourable input commodity prices.

Meanwhile, Fonterra’s FY26 forecast earnings guidance from continuing operations remains unchanged at 45-65 cents per share. It is intended that Fonterra’s dividend policy will be applied to these continuing earnings.  

As previously indicated, Fonterra expects the Lactalis transaction to be complete in the first quarter of the 2026 calendar year, subject to separation of the businesses from Fonterra and remaining regulatory approvals being received.