Fonterra Shareholders (FSF) H2 2025 earnings summary

Executive summary

• Leadership expressed strong satisfaction with FY25 results, highlighting hard work, solid numbers, and robust shareholder returns, with group revenue reaching NZ$26 billion, up 15% year-over-year.

• Strategic focus shifted to B2B dairy nutrition and executing existing plans in ingredients and foodservice, with divestment of global Consumer and associated businesses agreed for NZ$4.22 billion.

Financial highlights

• FY25 benefited from hedging, providing a $120M uplift versus FY24, and operating profit increased 13% to NZ$1,732 million.

• One-off costs totaling about $80M, including impairments and business exits, were not normalized in FY25 results.

• EBIT target for FY28 is set at approximately $250M, with growth driven equally by cost base reductions and business mix improvements.

• Profit after tax was NZ$1,079 million, down 4% year-over-year, but up 13% on a tax-adjusted basis.

• Final Farmgate Milk Price for 2024/25 was NZ$10.16 per kgMS, up NZ$3.8 billion in total payments to farmers.

Outlook and guidance

• EBIT growth to FY28 is underpinned by clear plans, new business investments, and cost removal, with execution risk seen as manageable.

• FY26 forecast earnings range is 45-65 cents per share, excluding divested businesses, and targeting a return to current earnings levels within three years post-divestment.

• CapEx is expected to remain elevated (~$1B) through FY27, then normalize to ~$600M from FY29 onward.

• Net debt is projected to rise gradually, reaching a 2.6x level by FY28, with a relatively flat profile through the period.

• Dividend policy maintained at 60%-80% of earnings, with recent payouts at the higher end.