Synlait’s half year suggests a ‘serious problem at the heart of the business’, says expert
Monday, 23 March 2026
Synlait’s latest half-year result, released this morning, was “frustratingly disappointing” for the company - and reveals a “serious problem at the heart of the business”, according to one agribusiness commentator.
Dr Nic Lees, a senior lecturer in agribusiness management at Lincoln University, says the company’s core operations are no longer bringing in enough revenue to cover the cost of production, and “that should set off alarm bells because the weakness sits in Synlait’s core business — milk powder, liquid milk, and nutritionals.
“This is the foundation of the company, and right now that foundation is under serious strain.”
Synlait Milk, headquartered in Canterbury, specialises in producing high-value nutritional milk products and ingredients for global customers, and manages approximately 4% of New Zealand's total milk supply.
Read more:
It was established to provide an alternative, high-value processing option to Fonterra, moving away from commodity-based dairy farming and focusing instead on creating specialised nutritional products for export.
But Synlait’s interim result this morning could not have been more different to Fonterra’s buoyant half year update. While Synlait’s revenue had risen to $949 million, up $32.2m, a loss of $1.4m in pre-tax profit had been generated, as opposed to a surplus of $94.5m in the same metric last year — a deterioration of almost $96 million.
Net losses of $80.6m were reported, down $85.4m.
It was a set of figures suggesting “the company’s sales are no longer even covering the direct cost of making and processing its products”, Lees said.
“Revenue held up, but cost of sales rose to the point where Synlait was losing money before administration, distribution, and finance costs were even counted. That is why the overall loss is so large. Once gross margin turns negative, every other cost line adds to the damage.”
Until Synlait’s core business starts covering its production costs again, the turnaround will remain long, difficult, and far from certain, she said.
Synlait said there were a range of reasons for the result - manufacturing challenges had led to an inventory shortfall, while there was also surplus milk at peak season, and milk sales “did not always go to plan”.
Adding to the pressures was a whole milk powder decrease in price at the end of 2025 that resulted in unfavourable Ingredients returns.
Chief executive Richard Wyeth said the numbers being presented to shareholders today were “frustratingly disappointing”.
“They are the result of a period where Synlait faced multiple headwinds and had little choice as to how to deal with them. They reflect a severe lack of optionality, not effort, and they do not define the company’s future – although recovery will take time.”
Alongside, today’s result, Synlait has released a new “roadmap to recovery” called “Stabilise, Simplify and Scale”. Board chairman George Adams said the roadmap was designed to “reposition Synlait for success. This begins with the sale of the company’s North Island assets and we are on track to complete that next week.”
The company’s forecast payout milk price is $9.90 per kgMS, comparing favourably to Fonterra’s $9.40 - $10.00 per kgMS.
Synlait has struggled in recent years after investing $400m in a new plant in Pokeno and other assets which it has had to sell, mounting debt, and the breakdown in its relationship with its largest customer and shareholder, A2 Milk, in 2023.