Fonterra upgrades earnings forecast as roadshow kicks off

Fonterra has increased its 2025 full-year earnings guidance from 40-60 cents per share to 55-75 cents per share, just as its “roadshow” for the potential sale of its consumer business gets under way.

An information pack for the roadshow says Fonterra has decided to keep its Greater China consumer business.

Chief executive Miles Hurrell said it was pleasing to see Fonterra deliver a strong earnings performance alongside a $10.00 per kgMS (kilogram of milk solid) forecast farmgate milk price midpoint, which he said was “a great outcome” for farmer shareholders.

“As we have finalised preparation of our interim results, and looked at the balance of the year ahead, we are pleased to confirm an upgrade in our full year forecast earnings range,” he said.

“This upgrade reflects the underlying strength of our core Ingredients business and the resilience in our Consumer channel, which is contributing to a robust result for businesses in the divestment perimeter,” Hurrell said.

“Our Consumer channel has shown good volume and margin growth while recovering the higher farmgate milk price this season,” he said.

The co-op will release its six-month results on March 20 and will confirm its interim dividend on that date.

Fonterra’s dividend policy is to pay out 60-80% of full-year earnings, with up to 50% of the full year dividend to be paid at interims.

Separately, Fonterra said it had started roadshow meetings with potential investor groups as part of the divestment process for its global Consumer and associated businesses.

The meetings are a step towards a potential initial public offering (IPO).

The entity would be known as Mainland Group if Fonterra proceeds with an IPO.

An information pack included indicative pro-forma historical financial information up to 2024 and reflected a more refined view of the components of the Mainland Group business compared to previous financial disclosures by Fonterra, it said.

The pack shows Fonterra has decided to retain a manufacturing facility in Saudi Arabia as well.

“These refinements have the effect of reallocating a larger portion of earnings into Fonterra’s core business,” the co-op said.

Fonterra’s NZX-listed units, which give investors access to the co-op’s dividends, rallied by 22c or 4.2% to $5.41 just after the earnings upgrade.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.