Synlait, a leading dairy group in New Zealand, reports a significant net loss of approximately $111.5 million for the financial year ending July 31, 2024, amid challenges related to debt and liquidity. Despite this setback, the company is seeing signs of recovery, supported by key shareholders, and is implementing a two-step deleveraging plan to stabilize its operations.
Synlait, a prominent dairy group based in New Zealand, has reported a substantial net loss of approximately $111.5 million for the financial year ending July 31, 2024. This loss represents a dramatic increase from the $2.6 million loss recorded in the previous year and reflects the challenges the company has faced in terms of debt and liquidity. A significant portion of this loss, around $70 million, is attributed to an impairment charge on long-term assets.
Despite the financial setback, Synlait managed to achieve a modest revenue increase of 2%, totaling approximately $1.03 billion. However, the company reported an EBITDA loss of about $2.5 million, although adjusted EBITDA showed a positive result of around $27.5 million, indicating potential for recovery.
The support of key shareholders has been crucial to Synlait’s recovery efforts, particularly backing from China Bright and A2 Milk Company (A2M). This support came after a tumultuous period earlier this year that nearly led to the company’s collapse. A critical capital raising initiative was successfully salvaged, despite facing resistance from a small group of shareholders.
In a bid to secure its milk supply for the upcoming year, Synlait has announced a one-off payment of $0.12 per kilogram of milk solids to South Island farmers, and an additional $0.03 to North Island farmers. This move is part of a broader strategy to stabilize operations and foster relationships with its suppliers.
Chairman George Adams acknowledged the challenges Synlait faced over the past year, emphasizing the company’s focus on “deleveraging.” To address its debt situation, Synlait is implementing a two-step refinancing plan that is set to commence on October 1, aimed at restoring financial stability and confidence in the company’s future.
As Synlait navigates these challenges, it remains committed to improving its financial health and re-establishing itself as a key player in the New Zealand dairy industry.
