Fonterra Reports Strong Profit Growth Amid Strategic Shifts

Fonterra Co-operative Group Ltd has reported a strong financial performance in its Q3 business update, showing a normalised profit after tax of NZ $1,158 million, which is an 11% increase from last year. The normalised continuing earnings per share also rose by 13% to 70 cents per share. However, return on capital slightly decreased to 11%, from a previous 11.9%.

The company has narrowed its FY25 full year forecast earnings range to 65-75 cents per share, a revision towards the upper end of the previous guidance. Additionally, Fonterra maintains a forecast Farmgate Milk Price of $10.00 per kgMS for both the 2024/25 and 2025/26 seasons, indicating steady market demand.

CEO Miles Hurrell emphasized the company's commitment to returning value to shareholders through both earnings and milk prices. "We’ve delivered strong shareholder returns through FY25, including a 22-cent interim dividend, and as we get closer to the end of the year, we are focused on maintaining this momentum," said Mr. Hurrell.

Fonterra is also advancing its strategic direction by divesting its global Consumer business, a move intended to sharpen its focus on the high-performing Ingredients and Foodservice sectors. Hurrell highlighted that this strategic divestment is expected to ensure strong returns and maintain the co-op's commitment to paying the highest sustainable milk prices.

The report indicates Fonterra’s consistent push to optimize its product mix and maintain a robust financial outlook, despite geopolitical uncertainties and variable market conditions.