Synlait Milk (SML) H1 2025 earnings summary

Executive summary

• Returned to profitability in HY25 with net profit after tax of $4.8 million, reversing a prior loss, driven by strong Advanced Nutrition demand, operational improvements, and cost control.

• EBITDA reached $63.1 million, up $43.2 million year-over-year and slightly above guidance.

• Revenue increased 16% year-over-year to $916.8 million, supported by advanced nutrition demand, asset optimization, and improved FX.

• Net debt reduced by 29% to $391.9 million, mainly due to a major equity placement and improved cash flows.

• Operational focus on manufacturing fundamentals, rebuilding farmer trust, and accelerating new business opportunities.

Financial highlights

• Adjusted NPAT improved by $26.1 million year-over-year; EBITDA up $43.2 million; NPAT of $4.8 million, up $101.0 million year-over-year.

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

• CapEx limited to $12.7 million, the lowest since 2017, with capital spend focused on high-return, small projects.

• Net debt/EBITDA (12-month trailing) improved to 4.6x from 10.1x in H2 2024.

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

Outlook and guidance

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

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

• Confident in forecasted milk supply for FY26, with most farmer suppliers remaining and new supplier interest exceeding expectations.

• Continued focus on operational and cost efficiency, customer delivery, and strengthening milk supply.

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