Fonterra reports US$161M profit in FY26 Q1

NEW ZEALAND – Fonterra Co-operative Group Ltd has reported a Group profit after tax of  US$161 million ($278 million) in its FY26 Q1 business update.

CEO Miles Hurrell said Fonterra’s Total Group earnings for Q1 are in line with this time last year, noting the higher global commodity prices in the period compared to the previous season. 

“Our Total Group profit after tax for Q1 is $278 million, up $15 million, and is equivalent to 17 cents per share. When excluding the costs associated with the Consumer divestment, Fonterra’s normalised earnings per share are 18 cents, up slightly on last year.

“Continuing operations delivered a profit after tax of $158 million, equivalent to 9 cents per share, slightly down on the same period last year reflecting differences in sales phasing. We maintain our full year earnings range for continuing operations of 45-65 cents per share,” said Mr Hurrell.

Fonterra’s strategy. 

In October, farmer shareholders voted to approve the divestment of Mainland Group to Lactalis for NZ$4.22 billion.

Mr. Hurrell noted that this represented a significant milestone and explained that the cooperative had received a strong mandate from its farmer shareholders to pursue its strategy of growing value as a global B2B dairy provider.

He emphasized that the organization was firmly focused on delivering on its commitments, including the target of restoring earnings to FY25 levels by FY28, to offset the impact of the Mainland Group divestment.

He added that, to support this goal, the cooperative was progressing with plans to invest up to $1 billion over the next three to four years in projects aimed at generating further value and driving operational efficiencies.

Forecast Farmgate Milk Price

Fonterra revised its forecast Farmgate Milk Price range for the season from $9.00 – $11.00 per kgMS to $9.00 – $10.00 per kgMS, with a new midpoint of $9.50 per kgMS.

This is off the back of strong global milk collections putting downward pressure on commodity prices, with the Co-op revising its forecast collections for the season from 1,525 million kgMS to 1,545 million kgMS.

Update on divestment completion and capital return

With farmer shareholders approving the Mainland Group divestment, the group explained that the next steps are to secure the required regulatory approvals and to separate the Mainland Group business from Fonterra.

Some of the regulatory approvals required have been obtained, including approval from the Overseas Investment Office in New Zealand, which Lactalis confirmed they have received this week. Other regulatory approvals are still pending.

Subject to these steps being achieved, the company expects the transaction to complete in the first half of the 2026 calendar year.

As previously shared, Fonterra is targeting a tax-free capital return of $2 per share to shareholders and unit holders, equivalent to around $3.2 billion, once the sale is complete.

Another shareholder vote will be required for the payment of the capital return, which will be implemented by way of a Court approved scheme of arrangement under Part 15 of the Companies Act 1993.

Fonterra expects that the shareholder vote on the capital return will occur on 19 February 2026 and the notice of meeting to be issued by the end of January 2026.  

Holding the shareholder vote early in 2026 will enable the Co-op to return capital to shareholders and unit holders as soon as possible after the transaction is complete. 

If the capital return is approved by shareholders, Fonterra will then seek final Court approval to undertake the return of capital subject to the sale completing.

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