Giant dairy co-operative Fonterra’s earnings have boomed thanks to the sale of its global consumer business and a strong performance in its foodservice and ingredients divisions.
Fonterra said on Thursday that its final farmgate milk price for the 2026 financial year would be $9.69 per kilogram of milk solids (kgMS), down from $10.16 per kgMS in Fonterra’s FY25 results.
It’s on the back of the dairy co-op reporting a profit after tax of $2.6 billion in the financial year ending July 31. That’s up 142% on the $1.07 billion net profit after tax in the previous period.
At the co-op's annual results last year, Fonterra set a target to rebuild earnings to 2025 levels within three years if its consumer and associated businesses were divested. Fonterra formally completed the $4.22 billion sale of Mainland Group and its household brand names Anchor and Mainland to French company Lactalis in March of this year. Fonterra then proceeded with the $2 per share capital return (from a total of $3.2 billion) to the co-operative's farmer shareholders on April 14.
“I’m pleased to share that our team’s focused execution of strategy in full-year 2026 has got us to that
target already, with underlying operating profit for our continuing business of $1.8 billion and profit after tax of $1.2 billion, equivalent to 71 cents per share,” Fonterra chief executive Richard Allen said on Thursday.
Fonterra’s total group reported operating profit was $3.4 billion, up from $1.7 billion last year, and includes the Mainland divestment benefit of $1.2 billion. Allen described the Mainland Group sale as a “significant step forward” for Fonterra.
Fonterra said on Thursday it is paying a final dividend for the 2026 financial year of 33 cents per share, bringing the total to 73 cents, up from 57 cents in the previous year. This includes the 24-cent interim dividend and the 16-cent special Mainland dividend paid in April.
Fonterra had announced in early September that it expected its full-year underlying earnings for the 2026 year to be at the top end of its previously announced range of 60-70 cents per share. The co-op’s dividend policy is 60-80% of full-year earnings.
Allen said Fonterra had collected, processed and shipped “near record volumes of milk” and allocated products for the highest possible returns.
“Despite some challenging conditions, including weather events and geopolitical volatility, we leveraged our full supply chain network and logistics partnerships to keep milk moving, achieving record shipping volumes and materially improving our delivery performance,” he said.
“Our Ingredients business delivered $1.293 billion in operating profit, supported by strong global protein demand, favourable pricing and product mix decisions. In Foodservice, we achieved $547 million in operating profit, which was driven largely by volume and pricing growth across all product categories and markets.”
In its release to the NZX on Thursday, Fonterra gave the following highlights
- Total cash returns to shareholders: $19.6 billion
- FY26 total cash dividends, fully imputed: 73 cents per share, up from 57 cents
- 2025/26 final Farmgate Milk Price: $9.69 per kgMS
- 2025/26 final Organic Milk Price: $14.13 per kgMS
- Total Group operating profit: $3.4 billion, up 97.6% on prior year, including a $1.2 billion Mainland divestment benefit
- Total Group profit after tax: $2.6 billion, up 142%
- Operating profit: $1.8 billion, up 23.6% on prior year
- Earnings of 71 cents per share, up 17 cents
- Return on capital: 14.2%, up from 11.7%
- FY27 forecast underlying earnings range: 65-85 cents per share
- 2026/27 forecast Farmgate Milk Price: $9.50 per kgMS, with a range of $8.50 - $10.50 per kgMS
- 2026/27 forecast Organic Milk Price: $14.30 per kgMS, with a range of $13.30 - $15.30 per kgMS
“Looking ahead, we’re planning for another season of strong milk supply. However, we are also well prepared for an El Niño weather pattern should this eventuate,” Allen said.
The co-operative’s forecast earnings range for the 2027 financial year is 65-85 cents per share.
Fonterra noted that the “improving outlook” reflected continued delivery from its B2B division, but future market conditions remain uncertain.
“Geopolitical volatility remains and with only two months complete, previous seasons tell us that things can always change,” the co-op said.
In terms of the milk price forecast for the new season that started in June 2026, Fonterra revised its 2026/27 season forecast for the third time on Monday. Fonterra now expects its farmgate milk price to be $9.50 per kgMS.
The new forecast midpoint has lifted from $9.25 per kgMS to $9.50 per kgMS, with the forecast range lifted and narrowed from $8.00-$10.50 per kgMS to $8.50-$10.50 per kgMS.
Fonterra’s 2026/27 opening farmgate milk price forecast in May was $9.75 per kgMS in May, followed by a revision to $9.25 per kgMS in July before being lifted to the current $9.50 per kgMS forecast earlier this week.
The annual results presentation is here.
This is the dairy industry payout history.
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