Fonterra has reported a net profit of $1.079 billion for the July 2025 year, down 4.3% while maintaining its milk price forecasts. 

The profit decline was largely due to a higher tax bill. 

Fonterra said its Ingredients business was the standout performer. 

Normalised earnings per share came to 71c, unchanged, and within Fonterra’s forecast range of 65c-75c. 

Total revenue jumped by 15% to $26 billion. 

The dairy co-op confirmed its farm gate milk price for the season just past at $10.16 per kg of milk solids, up one cent from its previous forecast in August. 

For the current season, Fonterra’s latest forecast is for the milk price to be in a range of $9 to $11 per kg of milk solids, unchanged from its previous forecast. 

Fonterra announced a full-year fully imputed dividend of 57c per share, up from 55c (unimputed). 

The co-op has forecast earnings per share for the current year of 45c to 65c. 

Chief executive Miles Hurrell said 2025 had been one of the co-op’s strongest years yet in terms of shareholder returns. 

The co-op is in the process of selling its consumer business to Lactalis for $4.4b. 

“We continue to see good demand from global customers for our high-quality products made from New Zealand farmers’ milk and this is driving returns through both the farmgate milk price and dividends,” he said. 

Hurrell said Fonterra was positioning the co-op to deliver further value through its remaining Foodservice and Ingredients businesses. 

“We have a pipeline of potential growth investments we’re assessing, with plans to invest up to $1b over the next three to four years in projects to generate further value and drive operational cost efficiencies,” he said. 

The slight decline in net profit reflected Fonterra’s higher tax expense in 2025 after the co-op elected not to deduct distributions to farmer shareholders from taxable income and instead attach imputation credits to dividends. 

Fonterra said it expects earnings to be back at the current level, post the asset sale to Lactalis, within three years. 

Looking ahead, Fonterra’s projects include: 

• Growing the value of its existing protein portfolio, in addition to the recently announced investment at Studholme, to support our Ingredients business. 
• Adding value to milkfat through new butter and cream cheese investments to support both its Foodservice and Ingredients businesses. 
• Investments in site operations including its Enterprise Resource Planning system replacement, data, AI and automation. 

“Our balance sheet strength gives us the confidence to return capital, invest in the future of the business and maintain our dividend policy,” Hurrell said. 

The co-op delivered a return on capital of 10.9%, in line with the target range of 10-12%. 

“The result was driven by higher operating profit in the Ingredients business, due to demand for our protein portfolio and our use of margin hedging tools and indexed-based pricing” Hurrell said. 

Foodservice sales volumes continued to grow off the back of continued demand in Greater China for high-value products including UHT cream, butter and mozzarella. 

The business proposed to be divested - Mainland Group - benefited from sales volume growth in the Consumer business and the Australia business having a stable milk price against higher global commodity prices, Hurrell said. 

CEO pay rises 

Hurrell was paid a total of $6.11 million for the 2025 financial year. That included a base salary of $2.49m, short-term incentive of $1.95m and a long term incentive of $1.50m. 

His total remuneration was up on the previous year’s $5.92m. 

Hurrell’s long-term incentive is subject to performance hurdles being met, and his 2025 payment represented a deferred component of the now disestablished 2021 executive incentive plan. 

Fonterra introduced a new incentive plan in the 2023 financial year aimed at “aligning the financial interests of Fonterra’s enterprise leaders with those of the Co-operative’s farmer shareholders”. 

The first grant of “alignment rights”, consisting of co-op units and farm units, was issued in October 2022, with a second tranche issued in October 2023. There was a transition from the previous EIP plan, which resulted in shorter performance periods for the first two years. 

That means the first payment date under the new plan will take place next September. 

Hurrell was awarded a third grant in October 2024. The structure means he can continue to receive incentive payments through to September 2030.