Fonterra Announces 2025/26 Farmgate Milk Price Amid Strong Earnings
Fonterra Co-operative Group Ltd has announced strong financial results, with a profit after tax of $1.15 billion for the fiscal year 2025. The co-op has opened its 2025/26 Farmgate Milk Price at $10.00 per kgMS, citing stable market demand.
Fonterra's earnings after tax have increased by $119 million compared to the previous year, reaching a normalized profit of NZ $1,158 million, which is an 11% rise. The normalised earnings per share have grown by 13%, standing at 70 cents per share. Nevertheless, the return on capital has slightly decreased to 11% from 11.9%. Fonterra's CEO, Miles Hurrell, reiterated the company's commitment to delivering strong shareholder returns through improved earnings and the Farmgate Milk Price.
Hurrell highlighted, "Our forecast Farmgate Milk Price for the current season is driven by strong demand for our milk price reference products, and our range remains unchanged at $9.70-$10.30 with a midpoint of $10.00 per kgMS." Though confident about ongoing demand, the company is cautious of geopolitical uncertainties potentially impacting the 2025/26 season, which sees the milk price set within a wide range of $8.00-$11.00 per kgMS.
Fonterra also underscored its strategic focus on strengthening its Ingredients and Foodservice businesses while proceeding with the planned divestment of its global Consumer businesses. This strategic realignment aims to boost returns and focus on core strengths. Hurrell stated, "We have been testing the terms and value of both a trade sale and IPO as divestment options. If we divest our Consumer business, we will still maintain our global reach and a diverse product mix sold to over 100 countries."
The financial results and strategy put in place bolster Fonterra's position as a major player in the global dairy market, capitalizing on its New Zealand base and operational strengths.
