NZ's Synlait Milk sees return to profitability on cost-cutting success (updated)

Synlait Milk

23/01/2025 20:54

(Adds further details in paragraphs 2 & 3, details on premiums
in paragraphs 6 to 8)
       Jan 24 (Reuters) - New Zealand's Synlait Milk  SML.NZ 
said on Friday it expects to return to profitability in fiscal
2025, driven by surging demand for its nutrition products and
successful cost-cutting measures, and forecast higher earnings
in the first half.
    The company's strategic review, initiated last year, paved
the way for a turnaround, despite initial setbacks including
additional expenses and withdrawn guidance for fiscal 2024.
        Synlait's focus on cost control, through reduced
consultancy fees, streamlined operations, and better asset
utilization in the North Island, has yielded significant
savings, it said.
        The dairy producer, which posted a loss in fiscal 2024,
projected earnings before interest, taxes, depreciation, and
amortization (EBITDA) between NZ$58 million ($32.92 million) and
NZ$63 million for the six months ending Jan. 31.
    That compares to NZ$19.9 million reported a year earlier.
    The firm said it has also placed additional milk premiums
for the next three seasons to retain its milk supply in the
country's South Island, paying NZ$0.10 for every kilogram of
milk solids (kgMS) till 2027/2028.
        These premiums will be paid on top of Synlait's base
milk price, which is the amount paid to farmers, and in addition
to incentives for specialty milk and other supplier-focused
programs like Lead With Pride, Synlait added. 
        Meanwhile, Synlait's base milk price, has been revised
upward four times last year, with the latest increase in
December, and now stands at NZ$10 per kgMS.
     
  

($1 = 1.7621 New Zealand dollars)

 (Reporting by Nikita Maria Jino in Bengaluru; Editing by Sriraj
Kalluvila and Shailesh Kuber)
 ((Nikita.Jino@thomsonreuters.com;))