Fonterra expects higher FY25 earnings

NEW ZEALAND – Fonterra Co-operative Group Ltd has provided an update on its forecast earnings for FY25, stating that it expects to achieve results in the upper half of its previously announced earnings range of 40-60 cents per share.

The cooperative attributes this to strong sales performance and favorable pasture conditions across New Zealand, which have contributed to an increase in its forecast milk collections for the season.

Fonterra CEO Miles Hurrell reported that the cooperative has maintained its momentum from the first quarter as it prepares to release its interim results on March 20.

He stated that strong demand across its sales channels continues to drive earnings, with the first-half accounts indicating a full-year forecast in the upper range of its guidance.

The cooperative has also benefitted from solid demand for its high-value ingredients products, with a well-contracted sales book for the season.

Hurrell noted that these factors put the company in a position to pay a strong interim dividend in line with the revised dividend policy announced in September 2024, which sets the payout range at 60-80% of full-year earnings, with up to 50% paid at the interim stage.

The cooperative also announced new developments concerning its global consumer business, which it has designated as Mainland Group in preparation for a potential divestment.

The move aligns with Fonterra’s broader strategy to maximize value for its farmer shareholders while ensuring continued growth for its well-known dairy brands.

Hurrell explained that this decision followed an extensive evaluation of how to drive long-term value while strengthening the cooperative’s focus on its food service and ingredients sectors.

“At the same time, we recognise the responsibility to find the right steward for iconic brands such as Anchor, Mainland, and Western Star and an ownership structure that allows these businesses to continue to grow,” he said.

A report by the cooperative indicates that both a trade sale and an initial public offering remain viable options for the divestment.

The strategic evaluation process will enable Fonterra to assess potential value and transaction terms before presenting a final proposal to shareholders for approval.

The company intends to engage with potential buyers in the coming weeks while also preparing for a possible public listing under the newly designated Mainland Group.

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