Solid start to Fonterra's financial year

When excluding the costs associated with the consumer business divestment, Fonterra’s normalised earnings per share are 18 cents, up slightly on last year, according to its first quarter results released last week.

Chief executive Miles Hurrell says continuing operations delivered a profit after tax of $158 million, equivalent to 9 cents per share, slightly down on the same period last year reflecting differences in sales phasing.

“We maintain our full year earnings range for continuing operations of 45-65 cents per share,” says Hurrell.

The co-op continues to make good progress on implementing its strategy, to grow value as a global business-to-business (B2B) dairy provider.

In October, farmer shareholders voted to approve the divestment of Mainland Group to Lactalis for $4.22 billion.

“This is a significant milestone and we’ve received a strong mandate from farmer shareholders on our strategy,” says Hurrell.

“We are firmly focused on delivering the commitments we’ve made, not least our target to lift earnings back to FY25 levels by FY28, offsetting the impact of the divestment of Mainland Group.

“To support this goal, we are progressing with plans to invest up to $1 billion over the next three to four years in projects to generate further value and drive operational efficiencies,” he says.

In September, Fonterra announced a $75 million expansion of butter production at its Clandeboye site to help meet growing global demand and improve product mix. Construction is nearing completion on the $75 million investment in the Studholme protein hub, with the first products expected in early 2026 and construction continues on the $150 million investment in a new UHT cream plant at Edendale, which is expected to be complete in the second half of 2026.

“We look forward to sharing further progress updates during the year,” says Hurrell.