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Fonterra Lifts Earnings Outlook Amidst Mideast Conflict
23 Mar
Summary
- Fonterra raised its full-year earnings guidance to 50-65 NZ cents per share.
- Half-year profit rose 3% to NZ$750 million as higher-value segments performed strongly.
- Fonterra expects potential Middle East conflict disruptions to supply chains and costs.
Fonterra Co-operative Group has raised its full-year earnings guidance for continuing operations to 50-65 NZ cents per share, up from a previous range of 45-65 NZ cents. This upgrade reflects better global commodity prices, robust underlying margins, and effective cost control.
The dairy giant reported a 3% increase in profit after tax for the six months ended January 31, reaching NZ$750 million. Performance was bolstered by strong results in its ingredients and foodservice channels, which delivered returns on capital of 11% and 12.6% respectively, supported by its protein portfolio and improved pricing.
Fonterra also increased its annual forecast range for the farmgate milk price to NZ$9.40-NZ$10.00 per kilogram of milk solids. Despite operational pressures from strong milk flows and adverse weather, the company managed the impact effectively. However, Fonterra cautioned that the Middle East conflict could lead to increased inventory levels and costs in the second half of the year, alongside price volatility.
The company has agreed to divest its global consumer and related businesses to Lactalis, with the transaction expected to be finalized by the end of March 2026.
