Fonterra Group announces US$692.95M profit in its Q3 FY 2025

NEW ZEALAND – Fonterra, a multinational dairy cooperative, has reported a profit of NZ $1,158 million, up 11% from $119 million on this time last year. 

Operating profit increased to NZ$1,740 million, up from NZ$267 million last year. The company’s rolling 12-month Return on Capital stands at 11%, surpassing the initial target for FY25 and aligning with its long-term goal of maintaining a return within the 10-12% range.

Mr. Hurrell, CEO of Fonterra, stated that the results demonstrate the scale and continued strength of Fonterra’s Ingredients channel, along with volume growth in the Foodservice and Consumer channels.

In Fonterra’s ingredients business, the profit was NZ$276 million. Operating profit was NZ$1,017m, a 17% increase reflecting stronger pricing and higher sales volumes in cheese and milk protein concentrates.

In foodservice, operating profit slipped by NZ$55 m to NZ$396m in the FY25 Q3; this was attributed to lower in-market margins due to input cost pressures, particularly within Fonterra’s Greater China UHT cream portfolio.

Hurrell said, “Our full year forecast earnings range of 65-75 cents per share assumes flat earnings in Q4 of FY25 due to the seasonality of our milk collections, the higher input prices for our Consumer and Foodservice businesses, ongoing investment in our ERP system and an increase in costs associated with shaping the Co-op post divestment to execute our strategy.”

Farmgate Milk Price

In addition to its profit announcement, Fonterra has set an opening forecast Farmgate Milk Price of NZ$10.00 per kilogram of milk solids (kgMS) for the 2025/26 season.

This decision is based on stable near-term market demand, although the company acknowledges ongoing geopolitical uncertainties that could impact future pricing.

“Our forecast Farmgate Milk Price for the current season is driven by strong demand for our milk price reference products. Our range remains unchanged at $9.70-$10.30, with a midpoint of $10.00 per kgMS. We’re also pleased to tighten our year-end forecast earnings within the existing range, given the strength of our third quarter performance,” said Mr Hurrell.

Strategic delivery 

Recently, the company announced a significant shift in strategic direction, including the decision to divest its global Consumer and related businesses.

Miles Hurrell stated that Fonterra’s key priority for the year has been the execution of its strategy, which aims to strengthen the cooperative’s focus on its high-performing Ingredients and Foodservice businesses.

According to him, the cooperative has been carefully assessing both a trade sale and an initial public offering (IPO) as potential divestment options.

“By focusing on our core strengths and the sales channels that deliver the highest returns, we have the confidence to target an average Return on Capital of 10-12%, which is above our 5-year average. This is alongside paying farmers the highest sustainable Farmgate Milk Price, which we are always committed to,” said Mr Hurrell.

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