Fonterra Co-operative Group (NZE:FCG) increased its farmgate milk price forecast for 2025/26 season and declared a special dividend for fiscal 2026.

The forecast range rose to between NZ$9.20 and NZ$9.80 per kilogram of milk solids from the previous range of NZ$8.50 and NZ$9.50 per kilogram of milk solids as global commodity prices improved.

The outlook exceeded ANZ Research's estimate of NZ$8.90 per kilogram of milk solids in December 2025.

"As we have seen, global dairy prices have been volatile across the season. Following the declines at the end of 2025, prices have lifted in the last four Global Dairy Trade events," Chief Executive Officer Miles Hurrell said. "As such, we continue to take a balanced approach with our Farmgate Milk Price forecast."

Fonterra also declared a special dividend of between NZ$0.14 per share and NZ$0.18 per share for the year ending July 31, as the company pushes for the sale of its mainland group to French dairy group Lactalis.

The special dividend will be from the underlying earnings generated by the mainland group while it is still under Fonterra's ownership.

The company seeks court approval for a capital return of NZ$2 per share to shareholders from the divestment, which is expected to be completed in the first quarter. Shareholders approved the scheme.

The divestment, first announced in August 2025, was part of the company's plan to offload its global consumer business to Lactalis for NZ$3.85 billion.

Bega Cheese's (ASX:BGA) licenses held by Fonterra were also part of the sale after both companies agreed to resolve the legal dispute regarding license agreements.

Hurrell said the forecast earnings guidance for the fiscal year of 2026 remains at a range of between NZ$0.45 per share and NZ$0.65 per share.

"Our interim dividend from continuing operations will be confirmed when we release our FY26 interim results and an update on the special Mainland dividend will be given at this time," Hurrell said.