New Zealand’s Primary Sector Enters 2025 with Optimism Amid Global Uncertainty

Market Highlights
The S&P/NZX Primary Sector Equity Index opened 2025 at 10,900, marking a 6% gain over 2024, while the broader NZX Top 50 Index saw an 11% rise—its best performance since 2020. Leading the charge are dairy giants Fonterra and a2 Milk Company, alongside other listed companies spanning horticulture, fishing, and wine.

Fonterra is poised for a strong 2025 after its December announcement of a record farmgate milk price forecast midpoint of $10/kg milksolids. With a share price of $4.20 and capitalisation of $6.75 billion, Fonterra will officially move to the NZX Main Board this year. Its 2024 performance was stellar, with a 65% rise in supply shares (FCG) and a 50% gain in Shareholders’ Fund units (FSF). Analysts predict another 10% gross yield for 2025, bolstered by strong earnings guidance.

A2 Milk, which has never paid dividends, is expected to declare its first-ever payout in February, targeting a 60–80% net profit after tax distribution ratio. This follows FY2024 revenue of $1.675 billion and 23c earnings per share.

Other Sector Performances
The horticulture sector rebounded from Cyclone Gabrielle, with Scales Corporation delivering net profits between $30–$35 million, a 17% rise in share price, and a 4% dividend yield. Seeka also posted a 23% share price increase with a similar yield.

In contrast, PGG Wrightson’s share price halved to $1.60 after a turbulent 2024, though directors remain optimistic about recovery as farmers resume investments.

Challenges and Recovery Prospects
Synlait Milk faces ongoing struggles, with its share price bottoming at 40c after a $3 drop over two years. The company has never paid a dividend and is unlikely to change course in 2025. Meanwhile, Marlborough Wine Estates delisted to cut costs, and fishing company NZ King Salmon saw a 10% drop in share price, offering no dividend for 2024.

A Strong Dairy Outlook
Despite these challenges, New Zealand’s primary sector remains anchored by its dairy industry. With Fonterra’s market leadership and a2 Milk’s anticipated dividend, the sector is well-positioned to capitalize on favorable market conditions. As demand from China gradually recovers, the sector’s resilience will likely continue to support broader economic growth in 2025.