Fonterra Co-operative Group Ltd has reported its FY26 annual results, delivering NZD 27 billion in revenue and nearly NZD 20 billion in cash returns to New Zealand farmer owners and unit holders.
The final Farmgate Milk Price for the 2025/26 season was NZD 9.69 per kgMS. The Co-op also declared a final fully imputed dividend of 33 cents per share, bringing fully imputed total dividends for the year to 73 cents per share. This includes the 24 cent interim dividend and 16 cent special Mainland dividend paid in April.
Fonterra Chairman Peter McBride said the Co-operative has continued building momentum and delivered at the top end of its performance expectations.
“Consistency is important to farmers and our shareholders. We’re proud of the collective effort that’s delivered another strong result, at the top end of our earnings guidance,” said McBride.
“The team hasn’t missed a beat despite the Mainland divestment process and the significant change that followed. Richard’s transition into the CEO role has been seamless, and it’s exciting to see the energy his team is putting into building off this strong position."
Fonterra CEO Richard Allen added that the Co-operative’s disciplined approach to strategic execution has once again generated strong results. FY26 was a year of delivery, and the teams collected, processed, and shipped near-record volumes of milk, allocated products for the highest possible returns, and reliably delivered them to customers around the world.
Despite some challenging conditions, including weather events and geopolitical volatility, Allen said Fonterra leveraged its full supply chain network and logistics partnerships to keep milk moving, achieving record shipping volumes and materially improving delivery performance.
Performance
Total Group reported operating profit was NZD 3.4 billion, up from NZD 1.7 billion last year, including the Mainland divestment benefit of NZD 1.2 billion. Reported profit after tax was NZD 2.6 billion.
Allen said that one year ago, Fonterra set a target to return earnings to FY25 levels within three years if the Consumer and associated businesses were divested. He was pleased to share that the team’s focused execution of strategy in FY26 has already met that target, with underlying operating profit for the continuing business of NZD 1.8 billion and profit after tax of NZD 1.2 billion, equivalent to 71 cents per share.
The Co-operative’s return on capital was 14.2 percent above the target range of 10-12 percent and shows the value of a focused B2B strategy.
The Ingredients business delivered NZD 1,293 million in operating profit, supported by strong global protein demand, favourable pricing and product mix decisions. In Foodservice, we achieved NZD 547 million in operating profit, driven largely by volume and pricing growth across all product categories and markets.
Strategy
Allen added that Fonterra’s strategy to create value for farmers through disciplined capital choices, operational efficiencies, innovation and a customer focus is delivering results, and will continue to guide its new era as a B2B Co-op.
He highlighted Fonterra’s foundations in New Zealand's milk supply, and said that as it moves forward as a B2B Co-op, it will stay focused on making the farmer offering as competitive as possible. This includes practical tools and services to make compliance easier, plus targeted support for the next generation of Co-op farm owners.
This year, Fonterra also confirmed the planned expansion of its organic milk business into the South Island and will continue with its recruitment drive for more organic farmers across the country to meet growing demand, off the back of a record organic milk price of NZD 14.13 per kgMS.
"Our New Zealand milk is complemented by our high-value, offshore whey protein sourcing, which in FY26 continued to deliver outstanding returns to the portfolio,” said Allen.
“Our priorities in FY26 were to complete the Mainland Group sale, unlock new manufacturing capacity, and continue with our Enterprise Resource Planning (ERP) software roll-out. I’m pleased to report that we have executed on all of these this year.”
Following approval from farmer shareholders, Fonterra completed the sale of Mainland Group in March and has been working to ensure a smooth separation of the two businesses.
It has progressed its capital investment programme and invested NZD one billion in essential sustainability and growth projects. Its ERP system replacement is also on track and on budget, with five sites now live and two more planned for later this year.
These priorities will continue into 2027 as Fonterra maintains its focus on investing in growth, operational efficiency and digital transformation.
This year, Fonterra also continued its sustainability efforts and made progress on a programme of long-term energy resilience projects across multiple sites to improve energy security, reduce gas usage, and support its emissions targets and future processing growth.
Allen also announced that the Co-op will invest an incremental NZD one billion over the next three years in the South Island to accelerate and expand its protein manufacturing network and improve its environmental performance, including its impact on water and emissions.
"These projects position the Co-op to respond to changes in how people want to consume dairy, with a growing focus on sustainably produced, protein-rich and nutrient-dense foods. They are critical to our future value growth and improve our optionality, increase our capacity and, as a result, strengthen returns for farmers and shareholders over the long term,” he said.
"Using the capital retained from the Mainland Group divestment, alongside our strong cash flow, this additional investment will help us move more milk from whole milk powder and commodities into high-value products, strengthen partnerships with existing customers, and pursue new opportunities as demand for advanced proteins continues to grow.”
Once operational in 2029, Allen said the investment is expected to create around 50 to 60 permanent roles and support local businesses involved in the construction projects.
Over the next three years, Fonterra expects total capital investment to be approximately NZD 1.3-1.6 billion per annum.
Outlook
Looking ahead, the co-op has plans for another season of strong milk supply and is also well prepared for an El Niño weather pattern should this eventuate.
The Co-operative is forecasting milk collections for the 2026/27 season to be just above 1.6 billion kgMS, and a Farmgate Milk Price of NZD 9.50 per kgMS, with a range of NZD 8.50 - NZD 10.50 per kgMS.
The 2026/27 Organic Milk Price forecast is NZD 14.30 per kgMS, within a range of NZD 13.30 - NZD 15.30 per kgMS.
Having reached the target for earnings to return to FY25 levels, Fonterra will no longer report on that target and will revert to its prior practice of forecasting earnings for the relevant financial year.
Accordingly, the Co-operative’s forecast earnings range for FY27 is 65-85 cents per share. This improving outlook reflects continued delivery from our B2B businesses, as they continue to grow high-value demand across our markets. Geopolitical volatility remains, and with only two months complete, past seasons show that things can always change.
Allen concluded that this year, Fonterra has delivered a strong set of results, executed on its priorities and positioned the Co-op for a new phase of value growth as a global B2B dairy ingredients provider.
The sale of Mainland Group was a significant step forward. As the Co-op heads into an increasingly changing world, its farmers’ quality, grass-fed milk, combined with flexible assets, a reliable supply chain, and deep customer and market presence, will help deliver long-term growth.
"We're building on our strong foundations, focused on making Fonterra’s products the world’s most sought-after source of nutrition and fostering an enduring Co-op for generations.”
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