What ‘we set out to deliver a year ago is happening’, says CEO Miles Hurrell.
Fonterra’s strong interim result for the 2025 financial year shows that its strategy is working, chief executive Miles Hurrell says.
It is a reflection of the hard work across the co-op from its farmer-owners through to those selling the product in the market, he said.
“What we set out to deliver a year ago is happening. We have seen the confidence come through in those conversations with potential investors.”
Fonterra is divesting its consumer business and is currently perusing both an IPO and trade sale of this business and will select one, which its shareholders will vote on.
It also lifted its earnings range to 55-75 cents per share. Fonterra CFO Andrew Murray said this was a result of resilience across its three business channels.
They were able to quickly respond to the higher milk price and this led to higher levels of resilience in their consumer and food service businesses, he said.
“It’s across all three of the channels.”
Its consumer business had an improved second quarter with a strong volume of sales coming out of southeast Asia, Murray said.
It also updated its milk price, narrowing its range from $9.50-$10.50/kg MS to $9.70-$10.30. Its midpoint remained unchanged at $10/kg MS.
Hurrell said global conditions remain favourable with strong demand from key importing regions. The co-operative is also well prepared to weather any potential geopolitical issues it faces.
“In term of where our focus goes, it’s about the things we can control.”
Hurrell said the result also shows the co-op is starting to get value from how its farmers farm in NZ.
While some farmers and some in government might be questioning whether NZ should opt out of the Paris Agreement on climate change, he said, customer feedback is showing the importance of farmers reducing their emissions.
“While you may see governments slow down their ambition, it’s not being slowed down from a customer perspective and that’s what is more important to us.”
This will be explained when the board and management meet with farmers in the coming weeks at roadshows, he said.
“Clearly Fonterra has a choice. Do we play with those customers who are prepared to pay the value that they do because of what they demand in how we farm or do we go to a market and customer that doesn’t?”
He was also optimistic about the possibility of New Zealand’s free trade negotiations with India resulting in access to that market.
“We have a lot to offer, not just in products but also in services as well to support the growing Indian economy.”
Looking ahead, while acknowledging that pundits have predicted another buoyant milk price for the 2025-2026 year, he was more cautious, pointing out they are in a volatile geopolitical environment.
“My message back to farmer-shareholders is that be mindful that we are dealing in an international market.”
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