Synlait Reports Second-Half Profit After Factory Stabilisation
Synlait Milk’s annual result was shaped by a sharp difference between the two halves of the year. The company reported a net loss of $75.4m for the 12 months to July 31st 2026, including an $80.6m loss in the first six months. In the following half, it recorded net income of $5.2m. Revenue for the year rose by 6% to $1.94bn, while gross profit fell by 64% to $37.7m. Excluding discontinued operations, the underlying full-year loss was $21.6m.
The first-half result reflected manufacturing constraints, production rescheduling and the diversion of some output into lower-margin bulk powders. Performance at Synlait’s Dunsandel plant in Canterbury improved during the second half. The share of production meeting exact customer specifications increased from 91% to 95%, and averaged 99% in August. The proportion of planned production achieved also rose from 90% to 103%.
Synlait said the improvements addressed delays in processing and supported customer delivery in specialised powder blending and advanced nutrition. Management described consistent factory execution as a prerequisite for increasing volumes and expanding commercial activity. The company’s divisions produced different results during the year. Consumer dairy gross profit increased by 32% to $51.7m, supported by international butter prices and wider cheese distribution through Australian retail channels.
Foodservice revenue rose by 62%, with sales of ultra-high-temperature long-life cream increasing in China and south-east Asian markets. The bulk ingredients business recorded a 15% decline in revenue to $574.7m, as seasonal milk volumes led to more whole milk powder production. Margins in advanced nutrition fell by 78%, reflecting additional quality-control requirements and the cost of catching up on production. A supply agreement for infant nutrition with a Middle Eastern customer is due to begin in 2027 and is intended to use capacity in higher-value processing facilities.
Synlait also reduced its debt following the sale of its Pōkeno manufacturing site and related Auckland assets to Abbott. The transaction was valued at $307m and produced net cash proceeds of $295.7m. It contributed to a $26.0m accounting gain in the second half. Net debt declined by 14% to $215.0m after the transaction and a $320m refinancing by a banking syndicate completed in late June. Bright Dairy, Synlait’s major shareholder, continued to provide credit support.
Cash generation remained weaker than the earnings result. Operating cash flow moved to a net outflow of $183.3m, with working-capital needs, inventory costs and delayed payments on export receivables contributing to the figure. Synlait paid suppliers in the Canterbury milking region a total of $10.07 per kilogram of milk solids for the 2025/26 season, consisting of a $9.69 base payment and $0.38 in quality incentives. The company’s initial base-price forecast for 2026/27 is $9.50 per kilogram.
Synlait closed administrative offices in Palmerston North, reorganised its leadership and concentrated operating resources around its southern assets. It has changed its financial year-end to December 31st to align reporting with seasonal production. The company plans to present a broader strategy in 2027 focused on increasing asset utilisation. Its acting executive leadership said the immediate focus was to turn improved manufacturing performance into cash that could be used to reduce debt.
