By Roshan Thomas
March 23 (Reuters) – New Zealand’s Fonterra Co-operative Group raised its full-year earnings outlook on Monday after posting a steady rise in half-year profit, while flagging potential impacts from the Middle East conflict on supply chains and costs.
The dairy producer said the conflict could increase its inventory levels and costs in the second half of the year, while contributing to volatility in global commodity prices.
Shares of the firm were down 0.2% at NZ$6.21 in early trade.
Fonterra raised its full-year earnings guidance for continuing operations to 50–65 NZ cents per share from a prior range of 45–65 NZ cents.
The upgrade reflects improved global commodity prices as well as strong underlying margins and cost control, the company said.
Fonterra declared an interim dividend of 24 NZ cents per share, up from 22 NZ cents a year earlier, and confirmed a special Mainland dividend of 16 cents per share, representing 100% of the unit’s fiscal 2026 earnings while under its ownership.
The world’s biggest dairy exporter’s reported profit after tax was NZ$750 million ($436.05 million) for the six months ended January 31, up 3% compared to NZ$729 million a year earlier.
Fonterra said performance was driven by growth in higher-value segments, with its ingredients business channel delivering an 11% return on capital and its food service channel 12.6%, supported by strength in its protein portfolio and improved pricing.
“The company looks to be benefiting from solid demand conditions and good execution, while the Middle East remains an important watchpoint rather than something that has derailed the story,” said Jeremy Sullivan of advisory firm Hamilton Hindin Greene.
The company also raised its annual forecast range for the farmgate milk price, the price it pays to farmers for milk, to NZ$9.40-NZ$10.00 per kilogram of milk solids, from prior expectations of NZ$9.20-NZ$9.80 per kgMS.
Chief Executive Miles Hurrell said strong milk flows, including record volumes from New Zealand’s South Island, along with adverse weather, had pressured operations, but the company was able to manage the impact.
Fonterra had agreed to divest its global consumer and related businesses to French dairy major Lactalis, with the deal slated to complete by the end of March 2026.
($1 = 1.7200 New Zealand dollars)
(Reporting by Roshan Thomas and Jasmeen Ara Shaikh in Bengaluru; Editing by Mark Porter and Chris Reese)
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