24 January 2025

2 minute read

By: Global Ag Media

Oceania

Shares of New Zealand's Synlait Milk soared on Friday after it signalled a return to profitability in fiscal 2025, driven by surging demand for its nutrition products and successful cost-cutting steps, and forecast higher earnings in the first half, reported Reuters. 

The dairy producer'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review, initiated last year, paved the way for a turnaround, despite initial setbacks including additional expenses and withdrawn guidance for fiscal 2024.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 jumped as much as 26.2% to NZ$0.53 in what could be its strongest trading session since Aug. 21, 2024. The benchmark NZX 50 index was down 0.3% at 2229 GMT.

The company'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.

Synlait, 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 update "provides investors and the market with confidence and some certainty in its performance ability moving forward", said Grady Wulff, a market analyst at online trading platform Bell Direct.

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.

Meanwhile, Synlait's base milk price was revised upward four times last year, with the latest increase in December. It now stands at NZ$10 per kgMS.

($1 = 1.7621 New Zealand dollars)