Fonterra Co-operative Group (FCG) H1 2025 earnings summary

Executive summary

• Profit after tax rose 8% to NZD 729 million, with EPS up to 44 cents per share, driven by higher operating profit and lower interest costs, despite increased tax expense and costs related to ERP upgrades and Consumer divestment.

• Operating profit increased 16% to NZD 1,107 million, led by strong Ingredients channel performance and improved product mix.

• Interim dividend of 22 cents per share, fully imputed, up from 15 cents last year.

• Strategy execution focused on accelerating cash to farmers, supporting lower emissions milk, and investing in manufacturing, supply chain, and decarbonisation projects.

• Consumer business divestment process is progressing, with both trade sale and IPO options under consideration.

Financial highlights

• Revenue for the six months ended 31 January 2025 was NZD 12.6 billion, up 14% year-over-year.

• Gross profit increased by NZD 192 million, mainly from improved margins and favorable product mix in the Ingredients channel.

• Net debt at NZD 5.5 billion, up NZD 1.3 billion year-over-year, reflecting higher advance rates and milk values.

• Gearing ratio increased to 43.3% from 39.4% year-over-year.

• Return on capital at 10.2%, down from 13.4% year-over-year.

Outlook and guidance

• FY25 Farmgate Milk Price forecast narrowed to NZD 9.70–10.30 per kgMS, midpoint NZD 10.00, the highest on record.

• Full year earnings guidance raised to 55–75 cents per share, reflecting strong Ingredients performance.

• Well contracted sales book and stable demand support guidance, but global volatility and geopolitical instability remain risks.