Fonterra Co-operative Group (FCG) H2 2026 earnings summary

Executive summary

• FY26 delivered record revenue and strong operational progress, with nearly $20 billion in cash returns to farmer owners and unit holders, supported by favorable stream returns and effective supply chain management despite regional disruptions.

• Achieved record milk volumes and highest second-half shipments in a decade, with total cash distributions of $12.42 per fully shared up farmer shareholder and a total payout of $10.42, including a $2.00 capital return.

• Completed the sale of Mainland Group, unlocking a $1.2 billion benefit and enabling a strategic shift to a B2B focus.

Financial highlights

• Operating profit reached $3.4 billion, up 97.6% year-over-year, including a $1.2 billion benefit from the Mainland divestment; underlying operating profit (excluding Mainland) was $1.8 billion, up from $1.5 billion year-over-year.

• Underlying profit after tax rose to $1.2 billion (71c per share), up from $0.9 billion (54c per share) the prior year, driven by higher milk collections and improved margins.

• Revenue increased 4% to $27.4 billion; underlying EPS rose to 71c from 54c; underlying return on capital improved to 14.2% from 11.7%.

• Free cash flow benefited from $4.0 billion in divestment proceeds and higher earnings, offset by increased capital investment.

• Gearing ratio decreased to 20.8% and net debt/EBITDA improved to 0.7x.

Outlook and guidance

• FY27 forecast Farmgate Milk Price range: $8.50–$10.50 per kgMS; forecast earnings range: 65–85c per share.

• Guidance for the next year is based on stream returns remaining at current levels, tracking toward the midpoint of the guidance range, with some reversion in stream returns expected in the back half of the next year.

• Organic milk programme expanding, with forecast organic milk price of $13.30–$15.30 per kgMS and sales volumes up 7.5% on FY26.

• Capital investment expected to be $1.3–$1.6 billion per annum over the next three years.

• El Niño drought risk may impact second-half supply.