Key facts
- Fonterra warned El Niño could affect milk volume growth at the end of the 2026/27 season.
- El Niño is expected to intensify further into 2027 and could be the strongest ever.
- Fonterra forecasts fiscal 2027 underlying earnings per share of 65 NZ cents to 85 NZ cents.
- Fiscal 2026 profit after tax more than doubled to NZ$2.61 billion.
- Fonterra will invest NZ$1 billion over three years to expand its protein manufacturing network.
New Zealand's Fonterra, the world's largest dairy exporter, warned on Thursday that the intensifying El Niño weather phenomenon could impact milk volume growth towards the end of the 2026/27 season. The World Meteorological Organization has indicated that El Niño could become the strongest ever, potentially leading to extreme weather events like droughts and typhoons.
Fonterra's outlook for fiscal 2027 underlying earnings per share is between 65 and 85 New Zealand cents, a range that is slightly above the 71 NZ cents recorded in fiscal 2026, after factoring in El Niño risks. Jeremy Sullivan, an investment adviser at Craigs Investment Partners, noted that El Niño represents a meaningful downside risk to Fonterra's FY27 outlook due to its potential to reduce milk production.
Despite these risks, Fonterra reported a significant increase in its fiscal 2026 profit after tax, which more than doubled to NZ$2.61 billion ($1.48 billion). This boost was attributed to gains from the sale of the Mainland Group to French dairy giant Lactalis and strong demand for its protein-rich products. The company also declared a final dividend of 33 New Zealand cents per share, bringing the total payout for the year to 73 NZ cents, up from 57 NZ cents a year earlier.
Fonterra plans to invest NZ$1 billion over the next three years to expand its protein manufacturing network in South Island, aiming to meet rising global protein demand. These projects are expected to create approximately 50 to 60 permanent jobs.