Synlait Milk Limited

FY25 reported group EBITDA was $50.7 million, an increase of $54.8 million versus FY24. Reported net loss after tax was $39.8 million, an improvement of 78% year on year, and adjusted NPAT was $0.8 million. Revenue was a record $1.8 billion, up 12%, gross profit increased to $105.3 million, and operating cash flow rose 451% to $165.5 million. Net debt fell 55% to $250.7 million, helped by last October’s equity raise and stronger trading, while one-off manufacturing-related costs totaled $43.5 million. For FY26, management gave no financial guidance, saying the North Island sale and broader strategic reset make it too early to provide targets; they did say financing costs should reduce further after refinancing and that they are targeting net senior leverage below 2.5x in FY26. The North Island asset sale to Abbott is valued at USD 178 million, or approximately NZD 307 million, with proceeds intended to pay down debt and leave Synlait largely debt-free by the end of FY26 except for working capital facilities.

Richard Wyeth framed FY25 as a “year of 2 halves,” with a return to profitability in the first half and tougher conditions later due to manufacturing issues. His strategic message was that Synlait needs to improve operational stability at Dunsandel, reduce complexity, and reset culture; he repeatedly emphasized that FY26 is about execution rather than near-term financial ambition. He also described the North Island divestment as a major step toward a “stronger, simpler and more secure” Synlait and said an updated strategy for Dunsandel should be ready by March 2026.

Andy Liu highlighted broad-based improvement in the financials: Advanced Nutrition gross profit rose by $21.1 million, ingredients improved by $26.6 million, and Consumer/Foodservice gross margin increased by $9.3 million. He said underlying gross profit reached $142.5 million, operating cash flow improved by $213 million, capital expenditure remained low and was 23% below the prior year, and financing costs were $48 million, down $7 million year on year. He added that net debt fell by $300.9 million or 55%, that refinancing was completed last Friday, and that the company is targeting a net senior leverage ratio below 2.5x in FY26.

Analysts focused heavily on the Dunsandel manufacturing issues, asking what was being done to prevent repeat disruptions and what “largely resolved” meant; management said the problems were a mix of people, process, systems, and engineering issues and that root-cause fixes are underway, with the next six months critical. Questions also centered on the North Island sale proceeds, potential acquisition capacity, and leverage; management said proceeds will first go to debt reduction, while longer-term capital allocation will be clarified in the March strategy update, and they reiterated 2.5x leverage as reasonable for now. Analysts also pressed for the EBITDA impact of the North Island assets and the effect of a2 Milk’s planned English-label migration, but management would only say the North Island exit should improve EBITDA by about $5 million to $10 million and declined to quantify the a2 impact for commercial-sensitivity reasons.