Fonterra Co-operative Group Limited (NS) Analysis

Overview

Fonterra Co-operative Group Limited (NS) (Fonterra) is a dairy co-operative, owned and supplied by nearly 9,000 farming families in Aotearoa, New Zealand. Through the spirit of co-operation and a can-do attitude, Fonterra’s farmers, along with 20,000 employees around the world, share the goodness of our milk through innovative consumer, foodservice and ingredient brands. Sustainability is at the heart of everything we do, and we’re committed to leaving things in a better way than we found them. Everyday people working hard to be Good Together in the community.

The Fonterra Shareholders' Fund (FSF) is a registered managed investment scheme under the Financial Markets Conduct Act 2013. The FSF provides investors an opportunity to invest in the performance of Fonterra. Outside investors who are not allowed to hold shares in Fonterra can invest in units in the FSF which gives them access to economic rights (such as distributions and capital movements), similar to those of a share.

Performance

The following information was extracted from Fonterra Co-operative Group Limited's (NS) Interim Report , released 23 March 2026:

• Total Group revenue: NZ $13.9 billion, up by NZ $1.3 billion

• Operating profit: NZ $1,231 million, up from NZ $1,107 million

• Profit after tax: NZ $750 million, up from NZ $729 million

• Earnings per share: 45 cents per share, up from 44 cents last year

• Normalised earnings per share: 51 cents per share, up from 47 cents last year

• Continuing Operations return on capital: 11.2% up from 10.4%

• Interim dividend, fully imputed: 24 cents per share

• Special Mainland dividend, fully imputed: 16 cents per share

• Forecast Farmgate Milk Price range: NZ $9.40 - $10.00 per kgMS, with a midpoint of $9.70 per kgMS

• Forecast milk collections: 1,565m kgMS, up 4%

• FY26 full year forecast earnings range for continuing operations: 50-65 cents per share

Total Group reported operating profit increased to $1,231 million from $1,107 million the year prior.

Reported profit after tax is $750 million, equivalent to earnings per share of 45 cents and up on 44 cents last year. When excluding the costs associated with the Consumer divestment, Fonterra’s normalised earnings per share are 51 cents.

The Co-op delivered a Return on Capital of 11.2%, up on this time last year and in line with the target range of 10-12%.

“The first half of the year has been shaped by strong milk flows, with the Co-op collecting record milk volumes in the South Island so far this season. When combined with several adverse weather events, these conditions have put pressure on the operations of all New Zealand milk processors.

"We have been able to navigate through these challenges due to the resilience of our network," says Mr Hurrell. "Our performance shows that we are growing the high-value parts of our business through optimal allocation of milk solids across our product mix, which is driving a strong return on capital for shareholders and unit holders."

Fonterra’s market performance has been strong, with the Ingredients business delivering a return on capital of 11% and Foodservice a return on capital of 12.6%. These results have been driven by our protein portfolio in the Ingredients channel and improved pricing in Foodservice to successfully recover the lift in butter and cream input costs seen last year.

Mainland Group performance improved during the first half of this year, primarily due to a favourable commodity price cycle.