New Zealand’s diary coop Fonterra posts robust HY26 results as earnings outlook improves
The dairy giant posted revenue of US$ 13.9 billion for the first half of the financial year, signalling sustained momentum across its core operations
AUCKLAND, March 23, 2026 — New Zealand’s Fonterra Co-operative Group Ltd has reported a strong set of half-year results for financial year 2026 [FY26], underpinned by solid global demand, improved commodity prices and disciplined cost control.
The dairy giant posted revenue of US$ 13.9 billion for the first half of the financial year, signalling sustained momentum across its core operations.
Fonterra declared an interim dividend of 24 cents per share, fully imputed from continuing operations, alongside a special Mainland dividend of 16 cents per share, also fully imputed. The special payout represents 100 per cent of Mainland Group’s FY26 earnings while under Fonterra’s ownership.
Buoyed by the strong performance, the cooperative has lifted its full-year earnings guidance for continuing operations to 50–65 cents per share, up from the previous range of 45–65 cents.
Chief Executive Miles Hurrell said the improved outlook reflects firmer global commodity prices and strong underlying margins, though he cautioned that volatility persists, particularly amid ongoing tensions in the Middle East.
“The underlying performance of Fonterra’s continuing business is stable, allowing the co-op to return all earnings associated with the Mainland Group business and lift our forecasts for the remainder of the year,” he said. “Demand for our products remains strong, and we are focused on maximising both the Farmgate Milk Price and earnings.”
The record date for both dividends is March 30, with payments scheduled for April 14. On the same date, Fonterra is targeting a US$2.00 per share capital return following the divestment of its Mainland Group, subject to the transaction completing by the end of March.
Strong operational performance
Fonterra reported an operating profit of US$ 1.23 billion, up from US$ 1.11 billion a year earlier. Profit after tax rose to US$ 750 million, translating to earnings per share of 45 cents, slightly up from 44 cents last year. Excluding costs linked to the consumer divestment, normalised earnings per share stood at 51 cents.
Return on capital improved to 11.2 per cent, within the co-operative’s target range of 10–12 per cent.
Hurrell said the first half was characterised by strong milk flows, with record collections in New Zealand’s South Island. However, adverse weather conditions placed pressure on processing operations.
“Despite these challenges, our network has proven resilient,” he said. “We are continuing to grow the higher-value parts of our business through optimal allocation of milk solids across our product mix.”
The Ingredients and Foodservice divisions delivered robust returns on capital of 11 per cent and 12.6 per cent respectively, driven by strong performance in protein products and improved pricing to offset higher butter and cream input costs.
Meanwhile, the Mainland Group benefited from a favourable commodity price cycle during the period.
Strategic progress and divestment
Fonterra has made significant progress on its strategy, including the planned US$ 4.22 billion sale of its global consumer and associated businesses, known as Mainland Group, to Lactalis. The deal is unconditional and expected to be completed by the end of March 2026.
The cooperative said it remains focused on its strategy to grow value for farmers as a global B2B dairy nutrition provider, leveraging its high-performing Ingredients and Foodservice channels.
It has also introduced more flexible shareholding requirements to make it easier for new farmer suppliers to join.
Investment in capacity and sustainability
Fonterra is expanding manufacturing capacity across several sites in New Zealand to meet rising demand for high-value dairy products.
Key projects include the completion of a new advanced protein hub at Studholme, expansion of a butter plant at Clandeboye, construction of a UHT cream facility at Edendale, and a US$ 35 million upgrade to the pastry butter line at Edgecumbe.
In parallel, the cooperative continues to roll out its decarbonisation programme at major sites, including Whareroa, Edgecumbe, Waitoa and Edendale, aimed at reducing emissions and securing long-term energy supply.
Outlook
Looking ahead, Fonterra warned that the conflict in the Middle East could disrupt supply chains, increase inventory levels and drive up costs in the second half of the year.
“The situation is complex and evolving daily, but we are confident in our ability to deliver products to customers,” Hurrell said.
“Our scale and strong relationships, including with logistics partner Kotahi, position us well to manage volatility. We remain focused on delivering on our strategic targets.”
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