Synlait Milk returns to profit with strong first-half performance

NEW ZEALAND – Dairy company Synlait Milk has reported a modest profit of US$4.8 million for the first half of the financial year, marking a significant turnaround from the US$96.2 million loss recorded the previous year. 

The Canterbury-based firm, which faced severe financial challenges just 12 months ago, credited its recovery to increased revenue, reduced debt, cost-cutting measures, and a cash injection from its two largest shareholders.

According to the company’s latest financial statement, revenue climbed 16% to US$917 million, driven by improved sales and operational performance. 

At the same time, Synlait managed to slash its debt by 29%, bringing it down to US$392 million.

This follows a turbulent period last year when the company required an emergency loan and a financial rescue package to stay afloat amid declining sales, a dispute with its biggest customer, A2 Milk, and mounting financial pressures. 

The US$96.2 million loss from the prior year included significant one-off costs that had weighed heavily on its balance sheet.

“Given the position Synlait was in 12 months ago, this return to profitability is a considerable commercial achievement,” acting Chief Executive Tim Carter said. 

The company, known for producing baby formula for A2 Milk and a variety of dairy products through its Dairy Works subsidiary, has maintained its milk payout forecast at US$10 per kilogram of milk solids, offering stability to its suppliers.

A report by Synlait highlighted its focus on strengthening core operations and seizing customer opportunities while keeping costs under control. 

Chairperson George Adams, who spearheaded the rescue efforts, expressed optimism about the company’s trajectory. 

“While we still have a lot of work to do, we know we are heading in the right direction,” Adams said. 

He emphasized that the priority moving forward is consistent delivery across all levels of the business.

Despite the positive figures, Synlait cautioned that progress on fully restoring its financial health might slow as it navigates refinancing its bank facilities. 

The company also noted a shift in its supplier relationships. Many suppliers who had previously threatened to leave have decided to stay, with only a handful confirming their departure.

Meanwhile, new suppliers are showing interest in partnering with the firm.

Synlait’s recovery is a relief to the local dairy industry, which has closely watched the company’s struggles. 

With its focus on operational efficiency and financial discipline, Synlait appears poised to rebuild its reputation and strengthen its position in the competitive dairy market.