Fonterra farmers are getting $9.69 per kilogram of milk solids for the season just finished, with the co-operative posting its strongest result in years after a period of significant change.
The co-op reported total group operating profit of $3.4 billion for FY26, up 97.6% on the prior year. That figure includes a $1.2 billion benefit from the sale of Mainland Group, completed in March. Strip that out and the underlying business still grew operating profit 23.6% to $1.8 billion — a result that, by Fonterra's own admission, came faster than expected.
"One year ago, we set a target for earnings to return to FY25 levels within three years if the Consumer and associated businesses were divested," CEO Richard Allen said. "I'm pleased to share that our team's focused execution of strategy in FY26 has got us to that target already."
For shareholders, the final fully imputed dividend is 33 cents per share, bringing total dividends for the year to 73 cents — up from 57 cents last year. Total cash returns to shareholders across the season, including milk payments and capital returns, reached $19.6 billion.
Organic farmers did especially well. The final organic milk price for 2025/26 came in at $14.13 per kgMS, and Fonterra confirmed it is pushing ahead with plans to expand its organic milk operation into the South Island, continuing a recruitment drive for more organic suppliers.
Chairman Peter McBride credited the result to collective effort across the organisation, noting that the business had kept pace through a significant restructure. "The team hasn't missed a beat despite the Mainland divestment process and the significant change that followed," McBride said. "Richard's transition into the CEO role has been seamless and it's exciting to see the energy his team is putting into building off this strong position."
Allen said near-record milk volumes were collected, processed and shipped during the year, and that the co-op had navigated weather disruption and geopolitical volatility without losing ground. "Despite some challenging conditions, including weather events and geopolitical volatility, we leveraged our full supply chain network and logistics partnerships to keep milk moving, achieving record shipping volumes and materially improving our delivery performance," he said.
The Ingredients business contributed $1,293 million in operating profit, driven by strong global protein demand. Foodservice added $547 million.
For the year ahead, Fonterra is forecasting a farmgate milk price of $9.50 per kgMS — slightly below the final FY26 figure — with a range of $8.50 to $10.50. The organic forecast sits at $14.30 per kgMS. Underlying earnings for FY27 are forecast at 65 to 85 cents per share.
The big new announcement is a $1 billion South Island capital investment over the next three years, focused on expanding protein manufacturing and improving environmental performance, including water and emissions. Allen said the investment would help shift more milk from whole milk powder and commodity products into higher-value lines. It is expected to create 50 to 60 permanent roles once the facilities are operational in 2029, alongside construction employment in the interim.
Total capital investment across the co-op is expected to run at $1.3 to $1.6 billion per year over that period.
"This year, we've delivered a strong set of results, executed on our priorities and positioned the Co-op for a new phase of value growth as a global B2B dairy ingredients provider," Allen said. "Our farmers' quality, grass-fed milk, combined with our flexible assets, reliable supply chain and deep customer and market presence will help us deliver growth into the long-term."