6 days ago
Fonterra forecasts milk price at $10 per kg of milk solids for 2025/26
The Fonterra 2025/26 milk price forecast is $10 per kg of milk solids.
Photo:
RNZ / Rebekah Parsons-King
Farmers are in line for another bumper dairy season after Fonterra revealed its opening forecast for the new season.
Fonterra's 2025/26 milk price forecast is $10 per kilogram of milk solids, driven by ongoing strong demand.
"Looking at the season ahead, we expect this demand to continue for now, but we acknowledge the ongoing geopolitical uncertainty and the potential for a wider series of outcomes across the season," chief executive Miles Hurrell said.
The uncertainty meant the new season milk price sat within a wide forecast range of $8 to $11 per kg of milk solids.
The mid-point of its current season milk price forecast range remained unchanged.
"Our forecast Farmgate Milk Price for the current season is driven by strong demand for our milk price reference products and our range is unchanged at $9.70-$10.30 with a midpoint of $10.00 per kg of milk solids," Hurrell said.
In its third quarter update, [
Fonterra] said its after-tax profit for the nine months ended April was $1.08 billion, up 11 percent from a year ago, while revenue rose 15 percent to $19.7b.
Excluding one-offs, its normalised profit was $1.16b which was equivalent to 70 cents per share, and an operating profit of $1.74b, up 18 percent.
The co-op also narrowed its year-end earnings range to 65 to 75 cents per share, at the upper end of the guidance provided in March of 55 to 75 cents per share.
"We've delivered strong shareholder returns through FY25, including a 22-cent interim dividend, and as we get closer to the end of the year, we are focused on maintaining this momentum," Hurrell said.
"We're also pleased to tighten our year-end forecast earnings within the existing range, given the strength of our third quarter performance," he said.
Fonterra said its focus has been implementing its plans to sell its consumer business, which delivered just over $3b in revenue (up 11 percent) and $319 million (up 28 percent) in operating profit for the nine months ended April.
Hurrell said work on the sale of the consumer business was ongoing.
"We have been thoroughly testing the terms and value of both a trade sale and initial public offering (IPO) as divestment options," he said.
"This work is on track as planned and we will seek farmer shareholder approval to divest through a vote in due course."
Hurrell said the results showed Fonterra had an "impressive business" as a business-to-business dairy company.
Fonterra's ingredients business delivered just under $13b (up 17 percent) in revenue for the period, with operating profit up 37 percent to $1.02b.
"If we divest our consumer business, we will still be a co-op with global reach and scale, and a diverse product mix sold to customers in more than 100 countries," Hurrell said.
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