Fonterra has increased it's full year profit forecast by five cents per share, and says more revisions are possible.
The company now expects its distributable profit to between 40 - 50 cents per share, up from the 35 - 45 cents it forecast in December.
But it has not changed it's target dividend range - of between 20 - 30 cents per share - indicating it's retaining 10 to 30 cents per share, in line with a new policy of retaining some profits to reduce reliance on borrowing.
Chief financial officer Jonathan Mason says the upgrade is largely due to the sale of the remaining 25% of the Anchor band to Arla, better returns from a joint venture with a specialty dairy products firm in Europe, and lower funding costs.
Mr Mason says the market now appears to be more balanced than the August to December period, when dairy prices increased by 90%.
if the forecast holds, Shareholders Council chairman Blue Read says farmers would still get about $6 per kg in milk payments and dividends for the season.