Synlait Milk (SML) H1 2025 earnings summary

Executive summary

• Returned to profitability in the first half with NPAT of $4.8 million, reversing a prior loss, driven by strong Advanced Nutrition demand, operational efficiency, and cost control.

• EBITDA reached $63.1 million, slightly above guidance, and net debt reduced by 29% to $391.9 million, mainly due to a major equity placement.

• Revenue increased 16% year-over-year to $916.8 million, with gross profit up 43% to $87.0 million.

• Operational focus included rebuilding farmer trust, cost, quality, yield, and accelerating new business opportunities.

• Settlement with The a2 Milk Company resolved disputes and included a $24.75 million payment.

Financial highlights

• Adjusted NPAT improved by $101.0 million year-over-year; EBITDA up $43.2 million to $63.1 million.

• Operating cash flow improved by $86.1 million but remained negative at $(12.0) million due to higher advance payments to suppliers.

• Net debt reduced to $391.9 million, down $158.8 million from FY24, following a $212.1 million equity placement.

• Gross profit per MT increased to $709, and return on net operating assets improved to 8.7%.

• Basic and diluted EPS turned positive after several loss-making periods.

Outlook and guidance

• Full-year EBITDA expected to significantly improve over FY24, though second-half progress will be slower due to milk stream returns and FX volatility.

• Targeting closing net debt of $250–$300 million and net senior debt to EBITDA ratio below 2.5x for FY25.

• Confident in milk supply for FY26, with new supplier interest exceeding expectations.

• Directors acknowledge ongoing material uncertainty regarding access to capital until sustained improvement and sufficient withdrawal of cessation notices are confirmed.

• Forecasts indicate banking covenants will be met for the remainder of the financial year.