Fonterra to invest $1 billion in South Island factory upgrades
Thursday 24 September 2026 · 4 outlets · 4 reports · updated In this story Fonterra
Fonterra will invest $1 billion over three years to expand its South Island manufacturing network and improve performance. This follows a financial year where the co-operative reported a $2.6 billion annual profit and $27 billion in revenue. The investment aims to address capacity issues caused by growing milk production.
Key facts
5 facts
- Fonterra reported $2.6b profit after tax for FY26
- Mainland Group was sold to Lactalis for a $1.2b benefit
- $1b investment planned for South Island over three years
- Final milk price for 2025/26 was $9.69 per kgMS
- Total cash returns to farmers and shareholders reached $19.6b
The full story
1 min read · 4 outlets
Fonterra has reported a $2.6 billion profit after tax for the 2026 financial year, representing a 142% increase from the previous year. Total revenue for the year to July reached $27 billion. The company's operating profit was $3.4 billion, which included a $1.2 billion benefit from the sale of its Mainland consumer brands to the French company Lactalis.
The dairy co-operative will invest an additional $1 billion into its South Island manufacturing network over the next three years. This investment aims to expand the production of high-value dairy proteins and improve water and emissions performance. Once fully operational in 2029, the programme is expected to create between 50 and 60 permanent jobs.
Fonterra's South Island network is currently nearing processing capacity during the busiest part of the dairy season. The investment will be funded by cash generated by the business and money retained from the sale of Mainland Group. Total capital spending for the co-operative is expected to range between $1.3 billion and $1.6 billion annually over the next three years.
The final milk price for the 2025/26 season was confirmed at $9.69 per kgMS. Total cash distributions to farmers and shareholders reached $19.6 billion, which included milk payments, dividends, and a capital return following the Mainland sale. The company is also planning to expand its organic milk business into the South Island.
Where reports differ
- One report states the underlying operating profit was $1.8b, while another notes the total operating profit was $3.4b including the Mainland divestment benefit
Compiled from reports by The Press, The Post, Stuff and 1News.