Fonterra Shareholders (FSF) H2 2026 earnings summary

Executive summary

• FY26 delivered strong operational progress, record milk volumes, and the highest second-half shipments in a decade, with total cash returns of $19.6 billion to farmer owners and unit holders.

• Achieved $27 billion in revenue and nearly $20 billion in cash returns, supported by favorable stream returns and robust B2B segment growth.

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

• Underlying profit after tax increased to $1.2 billion (71c per share), up from $0.9 billion (54c per share) the prior year.

• Management expects performance to track toward the midpoint of next year's guidance if current stream returns persist, with some reversion anticipated in the second half.

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 (continuing operations) was $1.8 billion, up 23.6% year-over-year.

• Profit after tax was $2.6 billion, up 142% compared to the prior year; earnings per share rose to 71 cents.

• Revenue increased 4% year-over-year to $27.4 billion; gross margin improved to 16.1% from 15.8%.

• Underlying return on capital rose to 14.2% from 11.7%, exceeding the targeted 10%-12% range.

• Gearing ratio decreased to 20.8% from 23.9%; 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.

• Organic milk programme expanding, with forecast organic milk price of $13.30–$15.30 per kgMS.

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

• Milk volume growth expected, with forecast collections slightly over 1.6 billion kgMS; El Niño drought risk may impact late-season supply.

• Management reaffirmed the 10%-12% return on capital target as a sustainable long-term range, despite occasional outperformance.