Synlait Milk Swings to Profit But Shares Dive on Cautious Outlook

New Zealand dairy company Synlait Milk Ltd (NZ:SML) returned to profitability in its half-year results but saw shares plunge 14% after warning of a slower second half. The company reported a net profit after tax of NZ$4.8 million for the six months ended January 31, 2025, a sharp recovery from a NZ$96.2 million loss in the same period last year.

The turnaround was fueled by rising demand for Advanced Nutrition products, better commodity prices, and cost-reduction efforts. Revenue climbed 16% year-over-year to NZ$916.8 million, signaling a recovery in Synlait’s core operations.

However, despite the improvement, Synlait issued a cautious outlook for the remainder of FY25. The company cited pressure from milk stream returns and ongoing foreign exchange volatility as key risks that could dampen its financial momentum.

Following the earnings announcement, Synlait shares dropped to NZ$0.87, marking their lowest point since February 28. The sharp market reaction reflects investor concern over the company’s near-term growth prospects despite its profitable rebound.

Chairman George Adams acknowledged the progress but emphasized that there is still “a lot of work to do” to stabilize performance and restore long-term investor confidence.

As Synlait navigates market uncertainties and currency headwinds, its ability to sustain growth in its high-margin nutrition segment will be critical. The company's half-year results show meaningful progress, but cautious guidance has sparked renewed scrutiny from shareholders and analysts alike.

This update puts Synlait back in the spotlight, with investors closely watching its next steps as it works to regain stability and long-term profitability in a volatile global dairy market.