Fonterra has today released its FY26 Q3 business update, demonstrating sustained performance and progress on the Co-op’s strategy, with year-to-date Total Group operating profit of NZD 1.8 billion, up NZD 103 million on this time last year.
The Co-operative has lifted and narrowed its full-year earnings forecast range to 60-70 cents per share, reflecting confidence in the Co-op’s contracted sales position for FY26 and its ability to navigate ongoing supply chain disruption.
The forecast Farmgate Milk Price midpoint for the current season is unchanged at NZD 9.70 per kgMS, with the range narrowing to NZD 9.60 to NZD 9.80 per kgMS.
The Co-operative has also announced an opening forecast Farmgate Milk Price for the 2026/27 season of NZD 9.75 with a range of NZD 8.00 to NZD 11.00 per kgMS to reflect potential impacts across the season from ongoing geopolitical risks and inflationary pressures.
CEO Richard Allen said Fonterra has delivered another strong result. Milk production is up considerably this season, and despite disruptions to global supply chains, the sales book is well contracted, with shipping volumes strong and the highest third-quarter volumes in a decade.
“As we look ahead to next season, we expect milk collections to remain high, in line with this season," said Allen.
"Our in-market sales teams are anticipating solid demand from across the regions despite potential volatility, and this is reflected in our opening forecast range."
Business performance
A disciplined focus on strategy has driven a Total Group year-to-date operating profit of NZD 1.8 billion, up from NZD 1.7 billion the prior year, and profit after tax of NZD 1.1 billion, equivalent to 65 cents per share.
Adjusting for Mainland’s result to reflect the Co-operative's underlying business, the Co-op delivered NZD 946 million profit after tax, equivalent to earnings per share of 57 cents, up from 53 cents this time last year.
The Ingredients business benefited from ongoing protein demand in the US and Europe, while Foodservice continued to achieve both volume and margin growth.
Strategy execution
Allen said the Co-op is committed to delivering on its strategy and growing value for farmer-owners as a global B2B dairy provider.
“During the quarter, we completed the sale of Mainland Group and returned NZD 3.2 billion to shareholders and unit holders. This marked a significant step in delivering our strategy, with the Co-operative firmly focused on growing our high-value Ingredients and Foodservice businesses," said Allen.
“We advanced work on our new NZD 35 million pastry butter sheet capacity at Edgecumbe, reached product validation stage on our NZD 75 million Studholme protein hub, and made good progress on our NZD 75 million butter expansion at Clandeboye and NZD 150 million UHT cream build at Edendale."
Allen was also pleased to announce that the planned expansion of the organic business into the South Island is progressing, following strong interest from farmers wanting to join the successful organic programme.
The forecast Organic Milk Price range for the current season is NZD 13.90 to NZD 14.10 per kgMS, with a record midpoint of NZD 14.00 per kgMS. The opening forecast for the 2026/27 season is NZD 13.00 - NZD 15.00 per kgMS, also with a NZD 14.00 per kgMS midpoint, reflecting the value customers see in the organic farmers’ milk.
These initiatives all reflect real momentum in the Co-op’s performance as it heads into the final quarter of the financial year.
Outlook
Looking ahead, Fonterra has strong foundations and a clear strategy to deliver value through the global Ingredients and Foodservice businesses. The full-year earnings guidance reflects the strong shipment volumes expected in the final quarter of the year.
At the same time, Allen acknowledged the uncertainty caused by the ongoing conflict in the Middle East.
"Like our farmers and others around the world, we are experiencing cost inflation and shipping disruptions. We are confident that our deep relationships with customers and logistics partners will continue to help us navigate these challenges."
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