Fonterra Co-operative Group (FCG) H1 2025 earnings summary

Executive summary

• Profit after tax rose 8% to NZD 729 million (NZD 0.44 per share), driven by higher operating profit and lower interest costs, partially offset by increased tax expense and ERP and Consumer divestment costs.

• Operating profit increased 16% to NZD 1,107 million, with strong performance in the Ingredients channel and positive momentum across all business channels.

• Interim fully imputed dividend of NZD 0.22 per share, up from NZD 0.15, and a return on capital of 10.2%, slightly above target.

• Maintained robust performance and a strong balance sheet despite global volatility, with early cash returns to farmers.

• Strategic focus on Ingredients and Foodservice, with Consumer business divestment process underway.

Financial highlights

• Revenue for the six months ended 31 January 2025 was NZD 12.6 billion, up 14% year-over-year; gross profit up NZD 192 million to NZD 2.2 billion.

• Gross margin at 17.7%, slightly down from 18.4% year-over-year.

• Net debt at NZD 5.5 billion, up NZD 1.3 billion year-over-year, with a gearing ratio of 39.4%.

• Free cash flow outflow of NZD 2,069 million in H1, due to higher working capital needs.

• Earnings per share up to NZD 0.44 from NZD 0.40 year-over-year.

Outlook and guidance

• FY25 Farmgate Milk Price forecast narrowed to NZD 9.70–10.30/kgMS, midpoint NZD 10.00, the highest on record.

• FY25 earnings guidance raised to NZD 0.55–0.75 per share, supported by strong Ingredients performance and resilience in Foodservice and Consumer channels.

• Capital investment for the full year expected to slightly exceed NZD 1 billion.

• 93% of full-year forecast USD cash flows hedged.

• Ongoing volatility in global markets due to geopolitical instability, with both risks and opportunities anticipated.