Canterbury dairy company Synlait Milk has reported a net loss of $75.4 million for the year to 31 July 2026, but says a second-half return to profit shows its long turnaround is finally getting traction.
The milk processor released its annual result to the NZX on Monday 28 September. The loss is almost double the roughly $40 million it lost the year before, and RNZ reports it is the company’s fourth loss in five years. It remains well short of the $182 million loss Synlait posted two years ago.
Chair George Adams did not dress the number up. “This was another difficult year for Synlait financially. Our first-half performance was affected by the impacts and costs of the 2025 manufacturing challenges. Achieving operational stability drove an improvement in the second half,” he said in the company’s results media release.
The year split into two very different halves. In the six months to January the company lost $80.6 million as it dealt with the fallout from the production problems of 2025, which forced repeated changes to its manufacturing plans and pushed more milk into lower-value commodity powders. In the six months to July it made a net profit of $5.2 million. That second-half figure was helped by a $26.0 million gain on the sale of its North Island assets, a point the company’s own letter to shareholders acknowledges.
Stripping out the North Island operations and the sale gain, Synlait’s underlying loss for the full year was $21.6 million and its underlying earnings before interest, tax, depreciation and amortisation were $46.3 million. Group revenue rose 6 percent to $1.94 billion, but gross profit fell 64 percent to $37.7 million. No dividend will be paid.
The shareholder letter, signed by Mr Adams and acting chief executive Leon Fung, put it plainly. “The financial results are disappointing but there is evidence of recovery.”
Most of that evidence is on the factory floor. The share of product made to specification at Dunsandel rose from 91 percent in the first half to 95 percent in the second, and averaged 99 percent in August. Attainment of the production plan, a measure of how much of the scheduled output was actually made, lifted from 90 percent to 103 percent. For a company whose recent troubles have been largely about quality failures and missed production, those are the numbers investors will watch most closely.
“The operational and financial results for the second half show Synlait is making progress, but we are not getting ahead of ourselves,” Mr Fung said in the release.
The balance sheet is in better shape than a year ago, largely because of the asset sale. Synlait completed the $307 million sale of its Pōkeno factory and Auckland sites to US healthcare group Abbott in April. According to the company’s investor presentation, the sale brought in $295.7 million of cash during the year and helped cut net debt by 14 percent to $215.0 million. That debt figure includes a shareholder loan from Chinese dairy group Bright Dairy, one of Synlait’s backers.
Cash flow is the weak spot. Operating cash flow swung from an inflow of $165.5 million to an outflow of $183.3 million, a fall of $348.8 million. The presentation blames weaker trading, higher inventory, and receivables that include milk sales still waiting to be paid for. The company says its focus now is turning the operational gains into cash and paying down more debt.
The performance across Synlait’s four business units was uneven. Its Consumer arm, which includes the Dairyworks, Alpine and Talbot Forest cheese brands, lifted revenue 32 percent and gross profit 32 percent to $51.7 million, helped by strong butter prices and more cheese shipped to Australian retailers. Foodservice revenue jumped 62 percent on growing sales of long-life cream into China and Southeast Asia, and the company says that unit had its first materially profitable year.
The bigger divisions struggled. Ingredients revenue fell 15 percent to $574.7 million and its gross profit dropped 26 percent, as peak-season capacity constraints pushed production towards whole milk powder when returns on it were poor. Gross profit in Advanced Nutrition, which makes infant formula and other nutrition products, fell 78 percent because of disrupted production, tighter quality controls and costly catch-up manufacturing. Synlait says it has signed purchase orders from a new Middle Eastern infant nutrition customer, with commercial supply starting in 2027.
For the Canterbury farmers who supply the company, the news was better. Synlait confirmed a final base milk price of $9.69 per kilogram of milk solids for the 2025/26 season, with average incentives of $0.38 on top, taking the total average payment to $10.07. That is the second-highest payout in the company’s history. Its forecast base price for the current 2026/27 season is $9.50 before incentives.
“We are very proud to have delivered the second highest milk price in Synlait’s history for the 2025/26 season,” Mr Fung said.
There will be no earnings forecast for the months ahead. Synlait is moving its balance date from 31 July to 31 December, so it is now in a five-month transitional period ending on 31 December 2026. The company says that period is too short and seasonal to compare with a normal year, and it will not give quantitative guidance for it. Its first full calendar financial year starts on 1 January 2027.
Management describes its recovery plan in three stages, stabilise, simplify and scale, first set out with its half-year result in March. The board says the first two are well under way. It has closed its Palmerston North office, trimmed the leadership team, and refocused the business on its Canterbury plants.
“We have made real progress stabilising and simplifying Synlait, and it is now time to start exploring a strategy to scale for success by maximising returns from our Canterbury assets. We look forward to sharing that strategy in 2027,” Mr Adams said.
The result caps a run of rescue measures that has included a $320 million bank refinancing signed at the end of June, the Abbott sale and continued financial support from its Chinese shareholders. A single profitable half does not change the picture on its own, and the second-half profit leaned on a one-off sale gain. But steadier factories and lower debt give Synlait the first genuinely positive signal it has been able to point to in some time.
Is Synlait finally turning the corner, or is one good half-year too little to go on? Tell us what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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