Synlait Milk (SML) H2 2024 earnings summary

Executive summary

• FY24 was the most challenging year on record, marked by excess manufacturing capacity, high debt, rising interest rates, and declining infant formula demand, resulting in significant losses.

• Major achievements included a balance sheet reset via a NZD 130m shareholder loan and a NZD 218m equity raise, settlement of disputes with The a2 Milk Company, and a strategic review of North Island operations to focus on Advanced Nutrition.

• Retaining milk supply is a top priority, with new incentives and one-off payments introduced to rebuild supplier confidence and stabilize the supplier base.

Financial highlights

• Total group revenue increased 2% year-over-year to $1.64 billion, but adjusted EBITDA was NZD 45.2m and 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.

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

• Net debt at balance date was NZD 551.6m, expected to reduce significantly after the equity raise.

• Capital expenditure decreased 53% to $30.5m as major projects wound down.

Outlook and guidance

• No FY25 financial guidance provided as focus remains on business recovery, deleveraging, and milk supply retention.

• Management targets net debt between $200m and $250m by end of FY25 and $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.