Fonterra Co-operative Group (FCG) H2 2025 earnings summary

Executive summary

• Leadership expressed strong satisfaction with the year's results, highlighting hard work and delivery of solid numbers for stakeholders.

• FY25 saw $16.2b in total payments, up $3.8b year-over-year, with $15.3b in milk payments and $916m in imputed dividends, resulting in a $10.73 average payout per supplying shareholder.

• Operating profit rose to $1.7b, up $205m, driven by strong Ingredients margins and favorable hedging; profit after tax was $1.0b, down $49m due to a tax treatment change and $106m in divestment/separation costs.

• Agreement reached to sell Mainland Group to Lactalis for $4.22b, targeting a $2.00 per share capital return if completed.

• Clear strategic focus on executing existing plans in ingredients and food service, with new capacity investments coming online.

Financial highlights

• EBIT growth target of approximately $250 million by FY2028, with about half driven by cost base reduction and half by business mix improvements.

• FY2025 benefited from a $100–$120 million uplift due to hedging, expected to revert to long-term averages in FY2026.

• One-off costs totaling about $80 million in FY2025, including impairments and business exits, were not normalized in reported results.

• Farmgate Milk Price increased to $10.16 per kgMS from $7.83; dividend rose to 57c (imputed) from 55c (unimputed).

• Reported operating profit was $1,732m (up from $1,527m); reported profit after tax was $1,079m (down from $1,128m).

Outlook and guidance

• CapEx expected to be around $1 billion annually through 2027, peaking slightly above before returning to ~$600 million from 2029 onwards.

• Net debt projected to rise gradually, reaching $2.6 billion by FY2028, with a relatively flat profile through the period.

• FY26 Farmgate Milk Price range maintained at $9.00–$11.00 per kgMS; continuing operations earnings forecast at 45–65c per share.

• Guidance range for FY2026 influenced mainly by food service margins and stream returns, with U.S. tariffs posing downside risk.

• Priorities include completing the Mainland divestment, capital return, and new manufacturing capacity coming online.