Synlait Milk (SML) H2 2024 earnings summary

Executive summary

• FY24 was the most challenging year on record, marked by disappointing financial results due to overcapacity, high debt, rising interest rates, and declining infant formula demand.

• Key achievements included a successful equity raise, balance sheet reset, settlement of disputes with The a2 Milk Company, and a strategic review of North Island operations.

• Deleveraging was prioritized through a two-step plan involving a shareholder loan and equity raise, supported by bank refinancing.

• Retaining milk supply is a top priority, with additional payments and incentives introduced to rebuild supplier confidence.

• Focus areas for recovery include customer growth in Advanced Nutrition and Foodservice, and operational improvements.

Financial highlights

• Total Group revenue increased 2% year-over-year to $1.64 billion.

• Adjusted EBITDA for FY24 was NZD 45.2 million; total EBITDA loss (non-adjusted) was NZD 4.1 million.

• Adjusted net loss after tax was NZD 60.4 million; total net loss after tax was NZD 182.1 million.

• Gross profit declined 61% to $56.0 million, and operating cashflow was negative ($47.2 million), down 221%.

• Net debt at balance date was NZD 551.6 million, expected to reduce significantly post-equity raise.

Outlook and guidance

• No FY25 guidance provided due to ongoing business recovery priorities.

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

• North Island operations targeted to reach cash flow breakeven in about two years.

• Successful refinancing in FY25 depends on improved trading and milk supply retention.