If approved, the sale is expected to go through in the first half of next year.<\/p>\n
The dairy co-op confirmed its farmgate milk price for the season just past at $10.16\/kgMS (per kilo of milk solids) \u2013 a record \u2013 and up one cent from its previous forecast.<\/p>\n
For the current season, Fonterra\u2019s latest forecast is for the milk price to be in a range of $9 to $11\/kgMS \u2013 with a $10 mid-point \u2013 unchanged from its previous forecast.<\/p>\n
Chief executive Miles Hurrell said he was confident about the $10.00\/kgMS price forecast for this year.<\/p>\n
\u201cThere is no question that there is a bit of uncertainty out there in the international market,\u201d Hurrell told a results briefing.<\/p>\n
\u201cThe geopolitics taking place are leading to an uncertain future for some of our buyers,\u201d he said.<\/p>\n
\u201cBut we still feel confident about that.<\/p>\n
\u201cWe know there will be additional milk coming through in places like North America and less so in Europe, but we are still seeing strong demand in those countries.\u201d<\/p>\n
CEO Miles Hurrell (right) and board chair Peter McBride announcing the $4.2 billion deal to sell its consumer business to French dairy giant Lactalis. Photo \/ Jason Dorday<\/p>\n
High milk prices have in the past acted as a headwind for Fonterra\u2019s profitability because milk is its biggest input cost, but the last few years have proven to be the exception.<\/p>\n
Hurrell said dairy markets generally have become deeper, which has helped add more certainty to prices, with price discovery also assisted by futures market pricing.<\/p>\n
\u201cThe depth in liquidity in the dairy markets now is significantly greater than what it has been previously,\u201d he said.<\/p>\n
Chief financial officer Andrew Murray said the co-op had, over the last three years, become smarter in how it goes about its pricing to ensure it maintains margins.<\/p>\n
Murray told the Herald Fonterra had become better at fast-moving consumer goods (FMCG) management.<\/p>\n
In terms of the impact of Mainland\u2019s possible departure from the group, Murray said the business had been operating \u201crelatively independently\u201d for the last nine months.<\/p>\n
Forsyth Barr senior analyst Matt Montgomerie said the co-op had produced a \u201csolid group of numbers\u201d.<\/p>\n
\u201cIt\u2019s reasonably healthy relative to history and they\u2019ve put it down to taking costs out, plus just the product mix shifting towards high-value ingredients and Foodservice,\u201d Montgomerie said.<\/p>\n
The co-op has forecast earnings per share for the current year of 45c to 65c.<\/p>\n
\u201cOur balance-sheet strength gives us the confidence to return capital, invest in the future of the business and maintain our dividend policy,\u201d Hurrell said.<\/p>\n
The co-op delivered a return on capital of 10.9%, in line with the target range of 10-12%.<\/p>\n
\u201cThe result was driven by higher operating profit in the Ingredients business, due to demand for our protein portfolio and our use of margin-hedging tools and index-based pricing,\u201d Hurrell said.<\/p>\n
Foodservice sales volumes continued to grow off the back of continued demand in Greater China for high-value products, including UHT cream, butter and mozzarella.<\/p>\n
Mainland benefited from sales volume growth in the Consumer business and the Australia business, having a stable milk price against higher global commodity prices.<\/p>\n
Hurrell said 2025 had been one of the co-op\u2019s strongest years yet in terms of shareholder returns.<\/p>\n
\u201cWe continue to see good demand from global customers for our high-quality products made from New Zealand farmers\u2019 milk, and this is driving returns through both the farmgate milk price and dividends,\u201d he said.<\/p>\n
Fonterra was positioning itself to deliver further value through its remaining Foodservice and Ingredients businesses.<\/p>\n
Hurrell said it had a pipeline of potential growth investments it was assessing, with plans to invest up to $1b over the next three to four years in projects to generate further value and drive operational cost efficiencies.<\/p>\n
Looking ahead, Fonterra\u2019s projects include growing the value of its existing protein portfolio, in addition to the recently announced investment at Studholme, to support the Ingredients business.<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n","protected":false},"excerpt":{"rendered":"Fonterra announced a full-year fully imputed dividend of 57c per share \u2013 a record \u2013 up from 55c…\n","protected":false},"author":2,"featured_media":42594,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[38116,5195,8613,138,3595,3311,4568,20833,38115,7226,38117,38114,5511,38118,101,23394,111,139,69,26346,1133,312,199,1529,61,1533,10119,1530],"class_list":["post-42593","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-38116","tag-be","tag-billion","tag-business","tag-by","tag-consumer","tag-earnings","tag-fill","tag-filled","tag-fonterra","tag-frances","tag-gap","tag-just","tag-lactalis","tag-left","tag-mainland","tag-new-zealand","tag-newzealand","tag-nz","tag-planned","tag-sale","tag-says","tag-take","tag-three","tag-to","tag-will","tag-within","tag-years"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/42593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=42593"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/42593\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/42594"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=42593"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=42593"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=42593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}