Fonterra sees profits surge, eyes B2B future

NEW ZEALAND –  Fonterra, New Zealand’s leading dairy co-operative, has announced strong interim results for FY25, showcasing a net profit of NZ $729 million, an 8% increase from the previous year. 

The co-op’s operating profit reached NZ $1.07 million, up 16%, while earnings per share rose 10% to 44 cents. 

Alongside these gains, Fonterra declared a fully imputed interim dividend of 22 cents per share.

The positive financial performance comes as the co-op sharpens its focus on business-to-business (B2B) operations and advances plans to divest its Consumer unit.

According to Fonterra’s latest update, milk collections are expected to climb 2.7% to 1.510 million kgMS, driven by favorable pasture growth across most of New Zealand earlier this season. 

However, drier conditions have recently emerged, posing potential challenges. 

The co-op also narrowed its forecast farmgate milk price range to NZ $9.70–$10.30 per kgMS, with a midpoint of NZ $10.00, reflecting confidence in market conditions. 

Despite this, the return on capital dipped from 13.4% to 10.2%, signaling some pressure on profitability metrics.

Ingredients business as the standout performer, generating an operating profit of NZ $696 million, a significant NZ $229 million increase from last year, even though sales volumes dropped by 3.9%. 

The Foodservice unit, however, saw its operating profit fall from NZ $342 million in FY24 to NZ $230 million, largely due to higher input costs. 

Meanwhile, the Consumer segment posted an 8.5% rise in sales volumes and improved margins, though its operating profit remained steady at NZ $173 million despite a higher farmgate milk price.

CEO Miles Hurrell praised the co-op’s resilience. 

“The co-op is in great shape, with milk collections, the forecast farmgate milk price, and earnings performance all up on this time last year,” he said. 

He emphasized the ongoing shift toward B2B, with site works underway at Studholme for high-value protein capacity and at Edendale for a new UHT cream plant. 

“As we look to the balance of the year ahead, we’re focused on maintaining this momentum in performance while progressing delivery of our strategy,” Hurrell added.

Fonterra’s robust interim results are strengthening its position as it negotiates the potential sale of its Consumer unit. 

The co-op is weighing both a stock market float and a trade sale, aiming to maximize value for its farmer owners. 

This dual-track process remains on schedule, with interest from investors and strategic buyers reportedly growing. 

At the same time, partnerships with Nestlé and Mars are boosting sustainability-linked funding, complementing Fonterra’s own efforts to support eco-friendly farming practices. 

With its FY25 earnings range holding steady at 55–75 cents per share, Fonterra appears well-positioned to navigate its evolving business landscape.