Fonterra profit up, advances Mainland divestment, plans NZ$1bn investment

Fonterra Co-operative Group Ltd reported a Total Group profit after tax of $278 million for Q1 FY26, an increase of $15 million year-on-year, equivalent to 17 cents per share. Continuing operations delivered a profit after tax of $158 million, equivalent to 9 cents per share, slightly down due to sales phasing differences, with the full-year earnings forecast remaining at 45-65 cents per share. The forecast Farmgate Milk Price was revised to NZD9.00 - NZD10.00 per kgMS, with a midpoint of NZD9.50 per kgMS, reflecting strong global milk collections.

The company is progressing with its strategy, including the farmer-approved divestment of Mainland Group to Lactalis for NZD4.22 billion. Regulatory approvals are ongoing, with the transaction expected to complete in the first half of the 2026 calendar year. Fonterra aims to return NZD2 per share, approximately NZD3.2 billion, to shareholders and unit holders as a tax-free capital return post-sale completion, with a shareholder vote anticipated on 19 February 2026.

Strategic investments include a NZD75 million expansion of butter production at Clandeboye and ongoing construction of a NZD75 million protein hub at Studholme and a NZD150 million UHT cream plant at Edendale. Fonterra plans to invest up to NZD1 billion over the next three to four years to generate further value and operational efficiencies.