Fonterra Lifts Farmgate Milk Price
Good news for Fonterra farmers. The co-op has raised this season’s farmgate milk price mid-point by 25c to $9.75/kgMS.
The strong performance has allowed the co-op to narrow its year-end earnings range to 65-75 cents per share, at the upper end of the guidance provided in March of 55-75c/share.
At the same time, Fonterra announced an opening forecast farmgate milk price for the 2025-26 season of $10/kgMS, driven by stable near-term market demand.
Chief executive Miles Hurrell says Fonterra is committed to delivering strong shareholder returns through both earnings and the Farmgate Milk Price.
“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.”
The co-op has retained its forecast milk price range for this season, which ends May 31, of $9.70-$10.30 with a midpoint of $10/kgMS.
“We’re also pleased to tighten our year-end forecast earnings within the existing range, given the strength of our third quarter performance,” says Hurrell.
Fonterra’s focus on optimising its product mix has driven a Q3 normalised profit after tax of $1,158 million, equivalent to 70 cents per share, with operating profit of $1,740 million, up $267 million on last year.
“This result reflects the scale and ongoing strength of our Ingredients channel, and volume growth in our Foodservice and Consumer channels with each channel increasing its third quarter performance compared to the same period last year,” says Hurrell.
“Our rolling 12-months return on capital is 11%, which is above our previous target for FY25 and within our long-term target range of 10-12%.
“Our full year forecast earnings range of 65-75 cents per share assumes flat earnings in Q4 of FY25 due to the seasonality of our milk collections, the higher input prices for our consumer and foodservice businesses, ongoing investment in our ERP system and an increase in costs associated with shaping the co-op post divestment to execute our strategy.
“We are heading into year end with a strong balance sheet and full year debt metrics on track to be below the co-op’s target range,” says Hurrell.
