Fonterra has reported a solid start to the 2026 financial year, posting a total group profit after tax of $278 million for the first quarter.
The result is up $15 million on the same period last year as the co-operative continues to reshape its operations and prepare for the divestment of Mainland Group.
Fonterra chief executive Miles Hurrell says the performance reflects stronger global commodity prices compared with last season, along with continued progress on the co-op’s strategy.
“When excluding the costs associated with the consumer divestment, Fonterra’s normalised earnings per share are 18 cents, up slightly on last year.
“Continuing operations delivered a profit after tax of $158 million, equivalent to 9 cents per share, slightly down on the same period last year reflecting differences in sales phasing.
“We maintain our full year earnings range for continuing operations of 45 to 65 cents per share.”
Mainland Group divestment progresses
Hurrell says the co-operative remains focused on delivering its long-term strategy following farmer shareholders’ approval of the $4.22 billion Mainland Group sale to Lactalis.
“In October, farmer shareholders voted to approve the divestment of Mainland Group to Lactalis for $4.22 billion. This is a significant milestone and we’ve received a strong mandate from farmer shareholders on our strategy to grow value as a global B2B dairy provider,” he says.
“We are firmly focused on delivering the commitments we’ve made, not least our target to lift earnings back to FY25 levels by FY28, offsetting the impact of the divestment.”
To support this, the Co-op plans to invest up to $1 billion over the next three to four years in value-generating and efficiency-driven projects.
Recent progress includes:
- A $75 million expansion of butter production at Clandeboye announced in September.
- The first rollout of the new Enterprise Resource Planning system in November, with further sites to follow in Q2.
- Construction nearing completion at the $75 million Studholme protein hub, with first product expected in early 2026.
- Ongoing construction of the $150 million UHT cream plant at Edendale, due for completion in the second half of 2026.
Hurrell says further updates will follow during the year.
Milk price revised to midpoint of $9.50
Fonterra narrowed its forecast farmgate milk price range for the 2025/26 season to $9.00 to $10.00 per kgMS, reducing the midpoint to $9.50.
The revision reflects higher global milk supply and softer commodity prices. Fonterra has increased its own forecast milk collections from 1,525 million kgMS to 1,545 million kgMS.
Capital return timetable confirmed
Farmer shareholders have already approved the Mainland Group divestment, and Fonterra is now working through regulatory approvals and the process of separating the business.
Approval from New Zealand’s Overseas Investment Office has been confirmed, although other regulatory processes remain underway.
Fonterra continues to expect the sale to be completed in the first half of the 2026 calendar year.
Once final approvals are secured, the Co-op intends to return $2 per share — around $3.2 billion — to shareholders and unit holders on a tax-free basis.
A shareholder vote on the capital return is scheduled for 19 February 2026, with the notice of meeting expected by the end of January. If approved, Fonterra will then seek final court approval to proceed, subject to transaction completion.
