Fonterra reported FY26 profit of $3.4bn and milk price of $9.69
Fonterra’s reported operating profit nearly doubled from the previous year to $3.4bn, while profit after tax rose 142% to $2.6bn. The operating-profit figure included a one-off $1.2bn benefit from the sale of Mainland Group, completed in March after approval by farmer shareholders.
Underlying operating profit from the continuing business reached $1.8bn, an increase of 23.6%. Underlying profit after tax was $1.2bn, equivalent to 71 cents per unit, while return on capital rose to 14.2% from 11.7%. Fonterra said this exceeded its target range of 10–12% and that it had restored earnings to its FY25 level a year after setting a three-year recovery target following the Consumer divestment.
Total cash returned to shareholders and unit holders was $19.6bn, with almost $20bn going to New Zealand farmer owners and investors. Fonterra declared a final fully imputed dividend of 33 cents, bringing the full-year dividend to 73 cents after a 24-cent interim payment and a 16-cent special Mainland dividend paid in April.
The final Farmgate Milk Price for the 2025/26 season was $9.69 per kgMS, the rate used to calculate payments to supplying dairy farmers. The final Organic Milk Price was $14.13 per kgMS, which the co-operative described as a record for the season. Fonterra attributed the result to global demand for protein-based dairy ingredients and to pricing and product-mix decisions in its Ingredients business.
Fonterra announced an additional $1bn investment in New Zealand’s South Island over the next three years. The programme will expand protein-manufacturing capacity and reduce environmental impacts, including those related to water and emissions. The company expects the investment to be operational in 2029 and estimates that it will create 50–60 permanent jobs, alongside construction work for local businesses. It expects total annual capital investment of about $1.3bn–$1.6bn over the period.
The company said the investment would be funded by capital retained through the Mainland sale and by cash flow. It also plans to expand its organic-milk business into the South Island and continue recruiting organic farmers across New Zealand. Fonterra said the Mainland divestment marked a move towards operating as a global business-to-business dairy-ingredients provider rather than as an owner of consumer brands.
For the 2026/27 season, Fonterra forecasts milk collections of slightly more than 1.6bn kgMS and a Farmgate Milk Price of $9.50 per kgMS, within a range of $8.50–$10.50. Its forecast Organic Milk Price is $14.30 per kgMS, with a range of $13.30–$15.30, while guidance for underlying earnings is 65–85 cents per unit. The co-operative said it would return to issuing a standard annual earnings range after reaching its FY25 recovery target ahead of schedule.
The results were the first full-year figures since Richard Allen became chief executive. Chairman Peter McBride credited the co-operative’s consistency during the Mainland divestment and the leadership transition. Mr Allen called FY26 “a year of delivery” and cited near-record milk collection and shipping volumes despite weather events and geopolitical volatility.
