Synlait returns to profitability
Synlait, a dairy company based in New Zealand, reported a return to profitability in their half-year results, with an impressive earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $63.1 million. The company's net profit after tax stood at $4.8 million for the six months ending January 31, 2025.
The forecast base milk price for the 2024/2025 season is $10/kg MS, with an additional premium available, bringing the total forecast average payment for suppliers to $10.48/kg MS. This achievement is notable considering the company's precarious position a year prior.
Tim Carter, the acting CEO, attributed this turnaround to getting the fundamentals right in operational performance. The company anticipates more farmers will withdraw cessation notices by March 31, 2025, to access new milk premiums. George Adams, the chairman, emphasized the need for sustained delivery throughout the remainder of the financial year.
In July, Synlait accepted a $130 million loan from their major Chinese shareholder, Bright Dairy, which helped mitigate bank debts. The company aims for a closing net debt of $250-$300 million and a debt-to-EBITDA ratio below 2.5, positioning itself for potential refinancing by the year-end.
The company is focusing on enhancing on-farm offerings, serving existing and new customers, and improving operational efficiencies as key strategies in the latter half of the financial year.
