Fonterra Shareholders (FSF) H1 2026 earnings summary

Executive summary

• Group revenue reached $13.9 billion for the half year, up year-over-year, with operating profit rising to $1.231 billion and profit after tax increasing to $750 million, driven by improved pricing, product mix, and robust Foodservice performance.

• Mainland Group divestment completed for $4.22 billion, enabling a $3.2–$3.9 billion capital return and special dividend to shareholders.

• Interim dividend of 24 cents per share and special Mainland dividend of 16 cents per share, both fully imputed, were declared.

• Management remains focused on global B2B dairy strategy, operational efficiency, and value creation for shareholders.

• Milk supply growth attributed to net gains from competitors and strong farmer momentum, with collections up 2.5% year-over-year.

Financial highlights

• Revenue grew 11% to $13.9 billion for the six months ended 31 January 2026, with operating profit margin improving to 8.8% and normalised EPS rising to 51 cents.

• Return on capital improved to 11.2% from 10.4%, with Foodservice achieving 12.6% and Ingredients 11%.

• Net debt reduced to $4.9 billion, supported by strong earnings and working capital management.

• Cash operating expenses per kgMS forecast at $0.98, ahead of FY26 target.

• Mainland business delivered a notable $71 million contribution, benefiting from commodity cycle changes.

Outlook and guidance

• FY26 Farmgate Milk Price forecast midpoint lifted to $9.70 per kgMS (range $9.40–$10.00), with full-year earnings guidance raised to 50–65 cents per share.

• Forecast milk collections expected to reach 1,565m kgMS, up 4%.

• H2 expected to see higher sales volumes but margin compression due to rising input costs.

• Three-year earnings target remains unchanged, with management committed to achieving it.

• Ongoing cost reduction and operational efficiency initiatives continue.