(Reuters) -New Zealand's Fonterra reported a 4.3% fall in its full-year profit on Thursday, weighed down by a higher tax expense after changes to how it treats farmer shareholder distributions.

The higher tax expense in fiscal 2025 followed Fonterra's decision to stop deducting distributions to farmer shareholders from taxable income, opting instead to attach imputation credits, a mechanism used to avoid double taxation of the company's profits, to dividends.

Fonterra added it expects normalised earnings per share in fiscal 2026 to a range between 45 and 65 New Zealand cents, down from 71 NZ cents reported for the current year.

The world's largest dairy exporter reported profit after tax of NZ$1.08 billion ($627.80 million) for the year ended July 31, compared with NZ$1.13 billion reported a year earlier.

It declared a final dividend of 35 New Zealand cents apiece, up from 25 NZ cents paid last year.

($1 = 1.7203 New Zealand dollars)