NZ's Fonterra raises annual earnings forecast, flags Middle East cost pressures (updated)

Fonterra Co-Operative

28/05/2026 02:57

Recasts story with details, background, and share prices

    May 28 (Reuters) - New Zealand's Fonterra FCG.NZ has raised its annual earnings forecast on Thursday after logging its highest shipment volumes in a decade, but cautioned that the Middle East conflict was pushing up costs and disrupting supply chains.

        The company now expects 2026 earnings per share of 60 NZ cents to 70 NZ cents, compared with its previous forecast of 50 NZ cents to 65 NZ cents, while posting a nine-month total group operating profit of NZ$1.76 billion ($1.04 billion), up from NZ$1.66 billion last year.

    The result was driven by a surge in milk production and robust export demand, with Fonterra posting its highest third-quarter shipment volumes in 10 years despite disruptions in the global supply chain.
  
"Our full-year earnings guidance reflects the strong shipment volumes expected in the final quarter of the year," said CEO Richard Allen, who was appointed in the top role in April.
The upgraded forecast, with a narrower range, comes as season-to-date milk collections to April 30 rose 4%, with record South Island volumes in March aided by favourable weather that extended the grazing season.

    Allen, however, flagged uncertainty from the Middle East conflict. "Like our farmers, and others around the world, we are experiencing cost inflation and shipping disruptions."
  

    In March, the world's biggest dairy exporter said the conflict could lift its 
    inventories
     and costs in the second half, while adding to volatility in global commodity prices.
  

    Over the past few months, several New Zealand and Australian firms have flagged a potential 
    fallout
     from the Middle East conflict, warning that rising costs could squeeze profits and dampen volumes.
  

    Fonterra also narrowed its annual forecast range for the farmgate milk price, the price it pays to farmers for milk, to NZ$9.60 to NZ$9.80 per kilogram of milk solids, from prior expectations of NZ$9.40 to NZ$10.00 per kgMS.
  

    Shares of Fonterra rose as much as 3% to NZ$4.530, hitting their highest level since April 30. 
  


($1 = 1.6946 New Zealand dollars)

 (Reporting by Rajasik Mukherjee; Editing by Alan Barona and Sherry Jacob-Phillips)
 ((Rajasik.Mukherjee@thomsonreuters.com))