Fonterra has reported FY25 results for the 12 months to July 31, with operating profit rising 13% to $1.73 billion.
Profit after tax was $1.07b, down 4% on last year, or up 13% on a tax-adjusted basis. Revenue increased 15% to $26b.
The co-operative declared a fully imputed 57c per share full-year dividend (22c interim, 35c final), and said total cash returns to shareholders were $16.2b. Return on capital was 10.9%, compared with 11.3% a year earlier (10.0% on a tax-adjusted comparison).
For the 2024/25 season, Fonterra set a final farmgate milk price of $10.16 per kgMS, equating to $15.3b in payments to farmers, up $3.8b on last year. Milk collections were 1.509 billion kgMS, up 2.6%.
Chief executive Miles Hurrell says demand remains firm.
“We continue to see good demand from global customers for our high-quality products made from New Zealand farmers’ milk and this is driving returns through both the farmgate milk price and dividends.
“Our vision is to be the source of the world’s most valued dairy. Our strategy is designed to grow end-to-end value for farmers by focusing on being a B2B dairy nutrition provider, working closely with customers through our high-performing Ingredients and Foodservice channels.”
As part of that strategy, Fonterra has agreed to sell its global consumer and associated businesses to Lactalis for $4.22b, subject to approvals.
“During the year, we’ve taken important steps towards this goal, including running a robust divestment process for global consumer and associated businesses.”
Fonterra is targeting a capital return of $2 per share (about $3.2 billion) if the sale proceeds, with a farmer-shareholder vote scheduled for October 30.
Hurrell says performance was underpinned by ingredients and continued foodservice growth in China.
“This result was driven by higher operating profit in the ingredients business, due to demand for our protein portfolio and our use of margin hedging tools and indexed-based pricing.”
Planned investments include specialty protein capacity at Studholme, UHT cream at Edendale, added butter and cream cheese capacity, and site modernisation including ERP replacement, data, AI and automation.
“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,” Hurrell says.
In terms of outlook, Fonterra lifted its 2025/26 milk collections forecast to 1.525 billon kgMS, kept a farmgate milk price forecast of $10 per kgMS (range $9–$11), and guided FY26 earnings from continuing operations at 45–65c per share, reiterating medium-term targets including return on capital of 10–12% and a dividend policy of 60–80% of earnings.
