New Zealand dairy co-op has reported a “year of delivery” it its results of the year to 31 July, delivering NZ$27bn in revenue and nearly $20bn in cash returns to its farmer owners and unit holders.
Operating profit rose 97.6% to $3.4bn, including $1.2bn from the divestment of the co-op’s Mainland business. Profit after tax rose 142% to: $2.6bn.
Operating profit was $1.8bn, up 23.6% on the previous year.
“Consistency is important to farmers and our shareholders,” said co-op chair Peter McBride. “We’re proud of the collective effort that’s delivered another strong result, at the top end of our earnings guidance. The team hasn’t missed a beat despite the Mainland divestment process and the significant change that followed.”
CEO Richard Allen said: “FY26 was a year of delivery. Our teams collected, processed and shipped near record volumes of milk, allocated products for the highest possible returns, and reliably delivered them to our customers right around the world.
“Despite some challenging conditions, including weather events and geopolitical volatility, we leveraged our full supply chain network and logistics partnerships to keep milk moving, achieving record shipping volumes and materially improving our delivery performance.”
He added: “One year ago, we set a target for earnings to return to FY25 levels within three years if the Consumer and associated businesses were divested.
“I’m pleased to share that our team’s focused execution of strategy in FY26 has got us to that target already, with underlying operating profit for our continuing business of $1.8nn and profit after tax of $1.2bn, equivalent to 71 cents per share.
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“Our Ingredients business delivered $1.293m in operating profit, supported by strong global protein demand, favourable pricing and product mix decisions. In Foodservice, we achieved $547m in operating profit, which was driven largely by volume and pricing growth across all product categories and markets.”
The co-op, which has been criticised by environmental campaigners, added that it has continued with its sustainability efforts, with a programme of long-term energy resilience projects across multiple sites to improve energy security, reduce gas usage and support emissions targets.
“Today” said Allen, “we are announcing the co-op will invest an incremental $1bn over the next three years in the South Island to accelerate and expand our protein manufacturing network and improve our environmental performance, including our impact on water and emissions.
“These projects position the co-op to respond to changes in how people want to consume dairy, with a growing focus on sustainably produced, protein-rich and nutrient-dense foods. They are critical to our future value growth and improve our optionality, increase our capacity and, as a result, strengthen returns for farmers and shareholders over the long term.
“Using the capital retained from the Mainland Group divestment, alongside our strong cashflow, this additional investment will help us move more milk from whole milk powder and commodities into high-value products, strengthen partnerships with existing customers, and pursue new opportunities as demand for advanced proteins continues to grow.
“Once operational in 2029, the investment is expected to create around 50 – 60 permanent roles, as well as supporting local businesses involved across the construction projects.”
Over the next three years, Fonterra said it expects total capital investment to be approximately $1.3-1.6bn per annum.
“We’re planning for another season of strong milk supply. However, we are also well prepared for an El Niño weather pattern should this eventuate,” said Allen.
