Synlait Milk has issued a profit warning, with the New Zealand dairy business warning investors it could report a first-half loss of as much as NZ$82m (US$49.4m).
The company, listed in New Zealand and Australia, cited lingering operational and cost impacts from last year’s manufacturing disruption and weaker returns from its commodities portfolio.
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Shares in Synlait Milk were down more than 18% in New Zealand and over 13% in Australia.
Synlait Milk said the manufacturing issues it had experienced at its Dunsandel site had largely been resolved but added it continues to face “related cost and operational impacts”.
The company is forecasting a reported net loss after tax of between NZ$77m and NZ$82m for the six months to the end of January. In the first half of the previous financial year, Synlait Milk made a net profit after tax of NZ$4.8m.
It is also projecting a half-year EBITDA loss of between NZ$28m and NZ$33m. For the corresponding period a year earlier, Synlait Milk booked EBITDA of NZ$63.1m.
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By GlobalDataThe group provided a forecast for an “underlying” EBITDA of break-even to NZ$5m. It is estimating it will report an underlying net loss of NZ$33-38m.
Synlait Milk said the current 2025/2026 financial year is set to act as a “valuable reset” for the business, with the planned divestment of its North Island assets still due to be completed on 1 April.
The company expects the proceeds to “substantially strengthen” its financial position, primarily through debt reduction.
Following the transaction, Synlait Milk intends to focus on its operations on Canterbury, while noting the company’s recovery will “take time”.
It added rebuilding inventory across multiple product areas required “significant adjustments” to its manufacturing plans during the season compared with a normal year.
To support those adjustments, Synlait made additional raw milk sales during teh first half, which it said “weighed heavily” on margins and lifted operating costs.
The first-half outcome was also affected by “lower relative returns” from the commodities portfolio.
Synlait Milk CEO Richard Wyeth, who joined the business in May, said: “We are very disappointed with the six-month result and the impact it has had on the pace of our financial turnaround. However, we have made progress with real momentum in our operations, a renewed Canterbury-based [leadership team] and the North Island sale set to fundamentally strengthen Synlait.
“Our strategy is being reset, and we are confident it will provide a pathway to return Synlait to success, although this will take at least 12 months.”
In 2024, the company had to turn to Bright Dairy and its second-largest shareholder The A2 Milk Co. for financial support amid a lack of funding to keep the company operational, replete with threats from its farmer milk network to withdraw supplies.
Synlait also needed a NZ$130m bailout loan from Bright Dairy. In the meantime, a settlement with A2 Milk over a long-running contractual and pricing dispute was also reached.
