Ah Tatua, You've Done It Again!
Waikato milk processor Tatua has again declared a record milk payout to farmer shareholders, leaving other processors in the dust.
The result marks the first full-year result since chief executive Richard Allen took over the co-operative.
Key FY26 Numbers at a Glance
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Total cash returns to shareholders: $19.6 billion
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FY26 total cash dividends, fully imputed: 73 cents per share, up from 57 cents
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2025/26 final Farmgate Milk Price: $9.69 per kgMS
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2025/26 final Organic Milk Price: $14.13 per kgMS
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Total Group:
- Operating profit: $3.4 billion, up 97.6% on prior year, including a $1.2 billion Mainland divestment benefit
- Profit after tax: $2.6 billion, up 142%
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Underlying business:
- Operating profit: $1.8 billion, up 23.6% on prior year
- Earnings of 71 cents per share, up 17 cents
- Return on capital: 14.2%, up from 11.7%
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FY27 forecast underlying earnings range: 65-85 cents per share
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2026/27 forecast Farmgate Milk Price: $9.50 per kgMS, with a range of $8.50 - $10.50 per kgMS
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2026/27 forecast Organic Milk Price: $14.30 per kgMS, with a range of $13.30 - $15.30 per kgMS
The final Farmgate Milk Price for the 2025/26 season was $9.69 per kgMS, the figure used to determine payments to dairy farmers supplying Fonterra.
The result reflects global demand for protein-based dairy ingredients and pricing and product-mix decisions within the co-operative's Ingredients business.
Fonterra declared a final fully imputed dividend of 33 cents per share, taking the full-year fully imputed dividend to 73 cents per share once combined with the 24-cent interim dividend and the 16-cent special Mainland dividend paid in April.
Profit Driven Partly by Mainland Divestment
Total Group reported operating profit was $3.4 billion, up from $1.7 billion the prior year. The increase includes a one-off $1.2 billion benefit from the Mainland Group divestment. Reported profit after tax was $2.6 billion.
Excluding the one-off item, underlying operating profit for the continuing B2B business was $1.8 billion, with underlying profit after tax of $1.2 billion, equivalent to 71 cents per share. Fonterra had set a target a year earlier to return earnings to FY25 levels within three years of the Consumer divestment; the company said it reached that target in the first year.
Return on capital for the year was 14.2%, above the co-operative's 10–12% target range. Fonterra attributed the result to its focus on business-to-business dairy ingredients rather than consumer brands.
Fonterra completed the sale of Mainland Group in March, following approval from farmer shareholders.
The company said the sale marks a shift toward operating as a global B2B dairy ingredients provider rather than a consumer-brand owner.
$1 Billion South Island Investment Announced
Fonterra announced an incremental $1 billion investment over the next three years in the South Island, directed at expanding protein manufacturing capacity and reducing environmental impact, including on water and emissions.
The company said the investment will be funded from capital retained through the Mainland divestment and from cash flow, is expected to be operational in 2029, and would create an estimated 50–60 permanent roles, in addition to construction-phase work for local businesses.
Fonterra said it expects total capital investment of approximately $1.3–1.6 billion per annum over the next three years.
Fonterra also confirmed plans to expand its organic milk business into the South Island and said it will continue recruiting organic farmers nationally. The season's organic milk price reached a record $14.13 per kgMS.
FY27 Outlook — What Farmers and Shareholders Can Expect
Looking to the 2026/27 season, Fonterra is forecasting:
- Milk collections just above 1.6 billion kgMS
- A Farmgate Milk Price of $9.50 per kgMS, within a range of $8.50–$10.50
- An Organic Milk Price forecast of $14.30 per kgMS, range $13.30–$15.30
- Earnings guidance of 65–85 cents per share for FY27
Having reached its FY25 earnings-recovery target ahead of schedule, Fonterra says it will revert to its prior practice of issuing a standard forecast earnings range each year, rather than tracking against that specific target.
Chairman Peter McBride credited the co-operative's consistency through a year of major change, including the Mainland divestment and CEO Richard Allen's transition into the role.
Allen described FY26 as "a year of delivery," pointing to near-record milk collection and shipping volumes despite weather events and geopolitical volatility during the year.
