Synlait Milk (ASX:SM1) announced a challenging half-year result for the period ended Jan. 31, characterised by financial losses and a strategic pivot toward recovery.
The dairy processor reported a net loss after tax of NZ$80.6 million, a sharp decline attributed to manufacturing hurdles, lower returns in its ingredients unit, and a conservative approach to tax assets.
While revenue grew slightly to NZ$949 million, gross profit plummeted by NZ$83.9 million to just NZ$3.1 million, and net debt surged by 88% to reach NZ$472.1 million.
CEO Richard Wyeth described the figures as "frustratingly disappointing," citing a "severe lack of optionality" during a period of intense headwinds.
The company has launched its 'Stabilise, Simplify and Scale' roadmap to guide its long-term turnaround.
A key component of this strategy is the imminent sale of the company's North Island assets, which Board Chair George Adams confirmed is on track for completion next week.
The company's performance was specifically hampered by the need to adjust manufacturing plans at its Dunsandel plant and a decision to limit the recognition of deferred tax assets.
Despite the bottom-line figures, Synlait maintains a positive outlook for its suppliers, forecasting a base milk price of NZ$9.50 per kg MS for the 2025/26 season.
Including additional premium payments, the total forecast average payment is expected to reach NZ$9.90 per kg MS as the company focuses on rebuilding customer inventory and streamlining its operational footprint.