Synlait Milk Limited

FY26 group revenue increased to about $1.94 billion. Reported group EBITDA was $8.1 million and underlying group EBITDA was $46.3 million. Reported net loss after tax was $75.4 million and underlying net loss after tax was $21.6 million. Net debt reduced 14% to $215 million, while operating cash flow was negative $183.3 million. On the operating side, manufactured-in-spec improved from 88% in FY25 to 93% in FY26 and production plan attainment rose from nearly 92% to 95.5%. In the business mix, Consumer revenue increased 32% and Foodservice revenue increased 62%; Foodservice gross profit improved by $15.6 million to $11 million, while Advanced Nutrition revenue was broadly flat and gross profit declined 78%, and Ingredients revenue declined 15% with gross profit down 26%. Management highlighted a second-highest-ever milk price of $10.07 per kg of milk solids, including incentives. No forward guidance was given for the five months ending 31 December 2026, but management said the second-half run rate looked sustainable, the new Middle East customer could backfill 18% of FY27 capacity, and full backfill of the lost capacity is expected in about 3 years.

Leon Fung framed FY26 as a recovery year after a difficult first half, emphasizing that operations stabilized in the second half and that the business has now moved meaningfully through the ‘stabilize’ and ‘simplify’ phases of its recovery road map. He pointed to improved manufacturing reliability, stronger quality controls, leadership changes, and a broader revenue strategy as signs that the business is being reset for more resilient growth. His tone was cautious but upbeat, repeatedly saying the company is stronger, simpler, and better positioned for the future.

Andy Liu said the first-half weakness came from manufacturing plan adjustments, lower ingredients returns, and deferred tax assets, and that the main full-year drags were price/mix and especially costs, which reduced impact by $39.8 million. He noted SG&A contributed a $1.6 million benefit from tighter controls, while financing costs improved by $22.2 million due to better banking pricing, debt reduction after the North Island sale, and more cost-effective funding. He emphasized that cash remains the biggest challenge, with negative operating cash flow of $183.3 million driven by higher receivables and inventory, though the North Island sale generated roughly $296 million and helped bring net debt down to $215 million.

Analysts focused on whether the improved second-half run rate is sustainable, how much of the lost a2 English-label volume can be replaced, and whether the company can stay within bank covenants without near-term waivers. Management said it is confident the second-half improvement can continue, that the new Middle East customer and a broader pipeline should backfill volume over time, and that it is currently comfortable it will meet covenant compliance. They also said the company will review whether to reinstate guidance around early February, but not before then.