Fonterra Reports Record $2.6 Billion Profit and South Island Expansion

Dairy co-operative Fonterra reported a record net profit of $2.6 billion for the fiscal year ending July 2026. The result was primarily driven by a $1.2 billion to $1.25 billion gain from the sale of its Mainland consumer brands business to Lactalis. The company's total group operating profit reached $3.4 billion, while its return on capital of 14.2% exceeded its target range of 10-12%.

Chief Executive Richard Allen announced a $1 billion investment over the next three years to expand the protein manufacturing network in the South Island. This initiative aims to shift production from commodities like whole milk powder toward high-value, nutrient-dense protein products and is expected to create 50 to 60 permanent jobs by 2029. The investment also focuses on improving environmental performance regarding water and emissions.

Looking ahead to the 2026/27 season, Fonterra forecasts milk collections just above 1.6 billion kg of milksolids and a farmgate milk price of $9.50 per kgMS. However, the company warned that El Niño could hinder milk volume growth toward the end of the season due to increased risks of droughts and typhoons. Despite these weather risks, the co-operative expects fiscal 2027 underlying earnings per share between 65 and 85 New Zealand cents.