Market News 30 March 2026

David Colman Writes:

Dairy companies’ announcements last week for Fonterra and Synlait Milk looked very different despite the New Zealand dairy sector having a strong 2025 to 2026 season in line with high commodity prices and a weak local currency.

Dairy farmers benefit from Farmgate Milk Prices at historically high levels.

The dairy giant Fonterra’s announcement was titled ‘Fonterra delivers another strong result for HY26’. 

The co-operative’s revenue climbed $1.3 billion to Total Group revenue of $13.9 billion for the first half of its financial year.

Operating profit improved by $124 million to $1.231 billion

Profit after tax was $750 million, up from NZ $729 million

Earnings per share improved from 45 cents per share, up from 44 cents, with normalised earnings per share at 51 cents per share, up from 47 cents.

Continuing Operations return on capital improved to 11.2% up from 10.4%

An interim dividend of 24 cents per share and a Special Mainland dividend of 16 cents per share  (both fully imputed) were declared.

As a result of the sale of the consumer brands business Fonterra farmer shareholders and unitholders are expected to receive a capital return of $2 per share/unit on 14 April.

Fonterra will invest $1 billion back into the company.

The company provided a forecast Farmgate Milk Price range of NZ $9.40 - $10.00 per kgMS and expects milk collections will be up 4% to 1,565m kgMS.

Fonterra’s FY26 full year forecast earnings range for continuing operations was provided in the range of 50 to 65 cents per share.

The business continues to expand with the construction of the newly completed Studholme advanced protein hub, with first trial products off the line in February 2026.

The company has further developments including:

- Clandeboye butter plant expansion commenced in January 2026, with product expected off the line in April 2027.

- New Edendale UHT cream plant under construction with first products to come off the line in late 2026.

- Edgecumbe pastry butter sheet line expansion with product off the line expected in April 2027.

CEO Miles Hurrell provided outlook noting that the conflict in the Middle East is having an impact on Fonterra’s supply chain which may increase inventory levels and costs during the second half of the year.

He warned that there was potential for further volatility in global commodity prices but was confident that it can be managed due to Fonterra’s scale and the strong relationships the business has with its customers.

Hurrell, who has less than 6 months left in the job after a 25-year career at Fonterra (including 8 as CEO), will be handing his successor a business in excellent shape. A new CEO is expected to be revealed in the months ahead.

Synlait Milk

In contrast to Fonterra’s strong results, Synlait Milk reported an EBITDA loss of $34.7 million, with underlying EBITDA of $4.1 million.

It’s reported net loss after tax was $80.6million, with an underlying loss after tax of $27.3million.

Net debt increased 88% to $472.1million.

Revenue increased by $32.3million to $949 million (up 3.4%) and Gross profit decreased to $3.1million (down 96% from 83.9 million) – noting both these figures include both continued and discontinued operations.

The company provided a forecast for the average Farmgate Milk Price for the 2025/26 season of $9.50 per kgMS with additional premium payments (specific to Synlait) taking the forecast to $9.90 per kg MS.

Looking ahead to the second half the company did not provide FY26 financial guidance with the board withdrawing guidance for the remainder of the financial year.

ANZ KangaNews Capital Markets Forum

I recently had the privilege of attending the ANZ KangaNews Capital Markets Forum, a preeminent event for many financial sector professionals.

This year the event was held at the SkyCity New Zealand International Convention Centre which opened its doors in February.

The centre is an impressive building which can host multiple events/exhibitions from large to small simultaneously.

The forums over the years include a series of discussions by expert panellists and presentations from economists, RBNZ representatives, and politicians.

The day began with Sharon Zollner commenting in depth regarding New Zealand economic indicators.

Her job of extrapolating data to provide a forecast of the country’s economic trajectory made more difficult due to the uncertainty associated with the conflict in the Middle East.

Data, ignoring the disruption to global energy flows, pointed towards New Zealand GDP growth in a recovery phase.

The expected recovery comes after a slowdown which: curtailed CPI inflation from as high as 7.3% to closer to 3%; shrank the current account deficit from 9% of GDP to 4%; reduced the level of household debt as a % of GDP to pre-covid levels; resulted in corporate debt as a % of GDP at its lowest level in 20 years; sees house prices at pre-bubble levels.

In the second half of 2025 there was an almost economy wide improvement, led by an already strong agricultural sector, with the housing market being an exception.

Government debt, mediocre productivity, infrastructure deficits, and energy remain serious issues, but the recession is viewed as over.

2026 started well but inflation remains a threat with the CPI (Consumer Price Index) above 3% and the oil price shock likely to move interest rates higher.

The impact on New Zealand from the Middle East conflict depends on the persistence of disruption and not just on its scale.

Petrol prices that have increased sharply might be ignored by the RBNZ in regards to monetary policy if they are deemed to be a brief and less costly blip but will be more of a concern with inflation greatly influenced by higher freight costs and shipping disruption, both of which would tend to increase costs and weigh on the NZ dollar.

Higher costs and greater uncertainty are undeniably negative for households, investment and jobs.

The labour market is forecast to improve with ANZ estimating that the unemployment rate is at its peak at 5.4%.

The ANZ continues to forecast interest hikes from December this year but is mindful of how the oil shock and any potential reversion may play out in addition to inflation indicators and growth projections that may mean hikes come earlier.

Mortgage rates and term deposit rates, including those offered by ANZ and others, have crept higher.

Regarding debt as a percentage of NZ GDP over the last 5 years - household debt has been remarkably stable with the household debt to income ratio no worse than before the pandemic, business and agricultural debt represents a smaller percentage, and government debt has become a higher percentage.

Fiscal deficits, not helped by high oil prices, are forecast to remain for the next 4 to 5 years with government debt on track to rise from $185 billion (42% of GDP) in 2025 to peak above $250 billion (46% of GDP) by 2030.

A chart was presented that showed that there were 7 New Zealanders of working age per over 65 year old in the 1960s which has fallen to about 3.5 today and is expected to be 2.5 by 2050 which will put pressure on health and superannuation costs.

Net migration has picked up from almost an even number of people entering and leaving the country but remains subdued. This is essentially the only way the country’s population is expected to grow and help increase the number of people of working age.

Tourism has lifted to 95% of pre-pandemic levels adding to the number of relatively optimistic datapoints presented.

My impression of the information presented was that New Zealand was set to improve gradually from a period of weakness but still very much depends on external factors such as a hopefully brief disruption to energy markets, tariff settings, and demand from our major trading partners. Our biggest customers are China, Australia, the USA, the EU, and Japan.

A Panel discussed the retail bond market of which many of our clients participate in.

Bond issuance in New Zealand was minimal last year with many issuers choosing to issue bonds in Australia and further afield.

The lack of scale and diversity of domestic bonds was highlighted with the debt market in Australia being approximately 20 times the size of New Zealand even though Australia has only 5 to 6 times the population.

It seemed based on certain panellists’ comments that institutional investors such as fund managers tend to downplay the role of the NZX Debt Market which allows for the trading of bonds, notes, etc.

I would counter that view by noting that having bonds traded on an exchange is important for managing maturity profiles, price transparency and liquidity.

The nature of the fixed interest market is that it is dominated by both institutional and retail investors with a buy and hold strategy which limits potential liquidity regardless.

Bondholders, even with no initial intention of selling before maturity, and issuers should still welcome a secondary market which allows them to offer bonds for sale on market.

Goodman Property Trust

Goodman Property Trust unitholders are expected to vote tomorrow on an extraordinary resolution to adopt a stapled structure.

This change is intended to give the business greater strategic flexibility.

If approved, the Trust will transition to a stapled structure. Goodman New Zealand Limited will become the corporatised entity, replacing the current trust structure.

Shares in Goodman New Zealand Limited will be stapled to shares in Goodman Property Services (NZ) Limited. These will trade together as stapled securities and cannot be transferred separately.

Following the change, the combined entity will be known as Goodman New Zealand Limited & Goodman Property Services (NZ) Limited (NS).

The new stock exchange code, GNZ, is expected to take effect from Tuesday, 7 April 2026.

Property for Industry bonds

Property for Industry Limited (PFI) announced today that it is offering a new 6.5 year senior secured fixed rate bond.

An interest rate has not yet been set but based on current market conditions, we expect it to offer around 5.35%.

PFI is an NZX listed industrial property specialist with a portfolio of over 90 properties worth more than $2 billion.

The Bonds will be listed on the NZX under the ticker code PFI040.

Property for Industry are paying the transactions costs for this offer, accordingly, clients will not be charged brokerage.

If you would like a FIRM allocation, please contact us no later than 10am, Wednesday, 1 April.

Payment date will be due no later than Friday, 10 April.

Mercury Bonds

Thank you to everyone that participated in the Mercury Energy bond issue.

The interest rate for its 7-year Senior Green bond was set at 5.17%, with payment due no later than 31 March 2026.

Clients interested in this bond are welcome to contact us as we have a small supply remaining.

Travel

13 April – Taupo – Johnny Lee

14 April – Hamilton – Johnny Lee

15 April – Tauranga – Johnny Lee

16 April – Lower Hutt – David Colman

17 April – Napier – Johnny Lee

Chris Lee & Partners Ltd