Synlait Milk’s profit recovery pledge appears to be on track as the New Zealand-based dairy and infant-formula business paints a positive first-half outlook.
Ahead of the company’s final six-month results due to be published on 24 March, Synlait said today (24 January) that it expects to post EBITDA in a preliminary range of NZ$58m to NZ$63m ($33.1m to $36.0m).
That would represent an improvement on the NZ$19.9m reported for the opening six months of the 2024 fiscal period and the full-year outcome of a NZ$4.1m loss for the 12 months to 31 July.
Tim Carter, who has been serving as acting CEO since October, when Grant Watson stepped down after a tumultuous year, emphasised that more still needs to be done to shore up the business.
“The Synlait team has worked extremely hard to lift productivity and performance in the past six months,” Carter said in a stock-exchange filing.
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“Today’s announcement demonstrates the huge progress being made and, while we cannot take our foot off the pedal, we are pleased to announce we expect to return to profitability at our upcoming half-year result.”
Last year, the New Zealand- and Australia-listed business had to turn to its largest shareholders for financial support amid a lack of funding to keep the company operational, threats from its farmer milk network to withdraw supplies, and a run of profit warnings.
Synlait said today that its improvement in profitability was linked to new business wins in nutrition products, a more “optimised” product mix, and reductions in the company’s headcount.
Synlait raised NZ$217.8m from its two largest shareholders – China’s Bright Dairy and The a2 Milk Company – last year to shore up the business.
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By GlobalDataWith the closing of the financing arrangement, a provisional settlement with A2 Milk over a long-running contractual and pricing dispute was also put to bed. That agreement was conditional on completing the funding exercise and also finalising a debt refinancing process with creditors.
As well as the challenges to get the equity funding, debt refinancing and a settlement with A2 Milk through the door, Synlait also needed a NZ$130m bailout loan last year from Bright Dairy, which is now the company’s largest shareholder with 65.3% of the shares.
A2 Milk remains the second-largest investor with 19.8%.
