Synlait Milk (SML) H2 2024 earnings summary

Executive summary

• FY24 was the most challenging year on record, with poor trading, high debt, rising interest costs, and declining infant formula demand leading to significant losses, but a balance sheet reset and dispute resolution with The a2 Milk Company were achieved.

• Major achievements included a NZD 130m shareholder loan, a NZD 218m equity raise, settlement of disputes with a2 Milk Company, and a strategic review of North Island operations focusing on Advanced Nutrition.

• Retaining milk supply is a top priority, with new incentives and additional payments announced to stabilize and incentivize farmer suppliers.

Financial highlights

• Adjusted EBITDA for FY24 was NZD 45.2m; total EBITDA loss (unadjusted) was NZD 4.1m; adjusted net loss after tax was NZD 60.4m; total net loss after tax (unadjusted) was NZD 182.1m.

• Total group revenue was $1.64B, up 2% from FY23, but gross profit fell 61% to $56.0m and operating cashflow was negative ($47.2m), down 221%.

• Net debt at balance date was NZD 559m, expected to reduce significantly after the equity raise; net debt increased 33% to $551.6m.

• Average farmgate milk price paid was NZD 8.11/kg, above the market price of NZD 7.83/kg.

• Capital expenditure was $30.5m, down 53% as major projects wound down.

Outlook and guidance

• No FY25 guidance provided due to ongoing business recovery priorities; successful refinancing in FY25 depends on improved trading and milk supply retention.

• Management targets net debt between NZD 200–250m by end of FY25 and a $45m annual EBITDA improvement by end of FY26.

• Advanced Nutrition volume growth for FY25 expected to be less than 10% over FY24, with more significant new volumes from NutraBase anticipated in FY26.