Synlait Milk Limited projects a return to profitability in HY25 with EBITDA guidance between $58 million and $63 million, underpinned by strategic growth and cost control. The company also enhances its financial incentives to secure South Island milk supply for the next three seasons.
- HY25 EBITDA guidance of $58m to $63m, up from $19.9m in HY24
- Growth driven by Advanced Nutrition products and Ingredients business optimization
- Cost control measures include reduced consultancy spend and headcount cuts
- New milk premiums of $0.10/kg MS for 2025-2028 seasons to South Island farmers
- Milk supply agreements amended to guarantee market-aligned pricing and advance rates
Synlait’s Return to Profitability
Synlait Milk Limited has announced a significant turnaround in its financial performance, forecasting a return to profitability for the half year ending 31 January 2025 (HY25). The company expects EBITDA to land between $58 million and $63 million, a substantial improvement from the $19.9 million reported in the same period last year. This guidance signals that Synlait’s recovery plan is gaining traction after a challenging period.
Acting CEO Tim Carter highlighted the hard work behind this progress, noting that while the company cannot afford complacency, the results reflect a meaningful uplift in productivity and operational performance. The announcement sets a positive tone ahead of Synlait’s HY25 results release scheduled for 24 March 2025.
Drivers of Growth and Efficiency
The improved outlook is underpinned by multiple factors. New business development in Advanced Nutrition products is driving top-line growth, while the Ingredients segment benefits from better foreign exchange management and an optimized product mix. These strategic moves have helped Synlait capture more value from its portfolio.
On the cost side, the company has implemented stringent controls, including reduced consultancy expenses and headcount reductions, particularly optimizing operations at its North Island assets. These measures have contributed to a leaner cost structure, supporting margin expansion.
Strengthening Milk Supply Partnerships
Recognizing the critical role of farmers in its supply chain, Synlait is reinforcing its commitment to South Island milk suppliers. The company announced new secured milk premiums of $0.10 per kilogram of milk solids (kg MS) for each of the 2025/2026, 2026/2027, and 2027/2028 seasons. These premiums are in addition to the incentives introduced in September 2024, signaling a sustained effort to reward and retain farmers.
In addition, Synlait is amending milk supply agreements to enhance cashflow security for farmers. From the current season, it guarantees an average milk price at least equal to the market base price, and from 2025/2026, it will match the market advance rate at a minimum. These contractual adjustments aim to provide farmers with greater financial certainty and reinforce Synlait’s leadership in New Zealand’s dairy sector.
Looking Ahead
Synlait’s dual focus on operational efficiency and strengthened supplier relationships positions it well for sustainable growth. The company’s ability to maintain momentum in Advanced Nutrition and Ingredients, alongside disciplined cost management, will be critical to delivering on its profitability targets. Meanwhile, the enhanced milk supply agreements could secure a stable raw material base, essential for long-term value creation.
Investors will be watching closely for the HY25 results to validate this optimistic guidance and assess the durability of Synlait’s recovery. The company’s strategic moves suggest a confident board and management team ready to capitalize on market opportunities while managing risks inherent in the dairy industry.
Bottom Line?
Synlait’s HY25 guidance and milk supply commitments mark a pivotal step in its turnaround, but execution will be key to sustaining momentum.
Questions in the middle?
- How will global dairy market conditions impact Synlait’s Advanced Nutrition growth trajectory?
- Can Synlait maintain cost discipline while scaling production and product innovation?
- What risks remain around milk supply stability despite enhanced premiums and contract guarantees?