Synlait warns of NZ$77–82m half-year loss after plant problems

Synlait Milk warned investors it expects a loss after tax of between NZ$77 million and NZ$82 million for the six months to Jan. 31, citing elevated costs and the lingering effects of manufacturing problems at its Dunsandel plant. The Canterbury-headquartered dairy processor said operational disruption forced an inventory rebuild that depressed margins and required a series of low-margin raw milk sales during the dairy season.

"The need to rebuild inventory across product segments required significant adjustments to Synlait’s manufacturing plans this dairy season, relative to a normal year. To enable these adjustments, additional raw milk sales were made during HY26, which weighed heavily on margins and operating costs," the company said in its market update. Synlait also flagged weaker returns from its commodities portfolio as a contributor to the first-half shortfall: "The company’s first half performance has also been impacted by lower relative returns from our commodities portfolio."

Company guidance separates underlying and reported measures. Synlait said underlying EBITDA for the period is expected to be between breakeven and NZ$5 million, while reported EBITDA will be a loss of NZ$28 million to NZ$33 million. On an underlying basis the net loss after tax is forecast at NZ$33 million to NZ$38 million, in contrast to the larger reported loss range. For context, the prior half had recorded a NZ$4.8 million profit.

Shares slid sharply on the update, with trading snapshots showing a fall to NZ$0.57 in one sequence and another reading near NZ$0.51, marking the stock’s weakest levels in several months. The company said recovery will be gradual and that management is resetting strategy to restore performance. Richard Wyeth, chief executive, commented: "We are very disappointed with the six‑month result and the impact it has had on the pace of our financial turnaround." He added, "Our strategy is being reset, and we are confident it will provide a pathway to return Synlait to success, although this will take at least 12 months."

A central plank of Synlait’s plan is the previously announced sale of its North Island assets, which the company says will substantially strengthen its balance sheet and allow it to center core operations in Canterbury. Synlait is targeting completion of the asset sale on April 1 and intends to use proceeds to significantly reduce debt. The company is also actively engaging with its banking syndicate while the transaction progresses.

Synlait noted several balance-sheet and reporting caveats. An insurance claim related to prior manufacturing losses has been accepted but the final recovery amount and timing remain uncertain. The company has taken a conservative approach to deferred tax assets and will not recognise additional tax losses beyond those recorded to July 31, 2025. Management added that the half-year books have not yet been closed and the preliminary update is subject to audit review. The company also confirmed it has not been affected by ARA ingredient issues tied to recent infant formula recalls.

Synlait plans to publish its audited half-year results on March 23, providing the full, reconciled financial picture and further detail on the turnaround timetable.