Synlait Milk, a New Zealand-based dairy and infant-formula business, is on track with its profit recovery pledge as it anticipates a positive first-half outlook. The company is expected to report EBITDA in the range of NZ$58m to NZ$63m ($33.1m to $36.0m) for the preliminary six-month results, marking a significant improvement from the NZ$19.9m reported in the first half of the fiscal year 2024 and the NZ$4.1m loss for the full year ending on July 31.
Acting CEO Tim Carter, who took over from Grant Watson in October, acknowledged the progress made in the past six months in terms of productivity and performance. He emphasized that while significant strides have been made, there is still more work to be done to strengthen the business and ensure its profitability.
In the previous year, Synlait faced financial challenges and had to seek support from its major shareholders to sustain its operations. This included a lack of funding, threats from its farmer milk network to withdraw supplies, and a series of profit warnings. However, the company’s profitability has improved due to new business wins in nutrition products, an optimized product mix, and a reduction in the company’s headcount.
To shore up its business, Synlait secured NZ$217.8m from its two largest shareholders, China’s Bright Dairy and The a2 Milk Company, last year. This funding was crucial in addressing the financial issues the company was facing and ensuring its stability. Additionally, a settlement with A2 Milk over a long-standing contractual and pricing dispute was reached, contingent on finalizing the funding exercise and debt refinancing process with creditors.
In addition to the equity funding and settlement with A2 Milk, Synlait also obtained a NZ$130m bailout loan from Bright Dairy last year, further solidifying their position as the company’s largest shareholder with a 65.3% stake. A2 Milk remains the second-largest investor with a 19.8% share.
Looking ahead, Synlait is focused on maintaining its positive trajectory and returning to profitability. The company’s commitment to improving its financial performance, streamlining operations, and strengthening its partnerships with key stakeholders will be crucial in achieving sustainable growth and long-term success in the dairy and infant-formula market.
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