Milk suppliers flocking to Synlait after mass exodus sets company for ‘2027 and beyond’

Monday, 24 March 2025

Synlait is generating major interest from dairy suppliers after solid farmgate prices and global demand pushed a 105% profit lift for the business in the first half of 2025.

The company announced its half-year result on Monday and said a “majority” of its suppliers in the South Island had chosen to stick out their contracts with the company, after massive debt and near-insolvency drove many suppliers to give their two-year notices to cease supply contracts last year.

Synlait turned a substantial loss into a significant profit in the current half year, posting a 105% profit bump for the last six months to the end of January, raking in $4.8 million in net profit on its $96.2m loss in the previous year. Revenue was up 16% at $916.8m, from $793.5m in the previous half-year.

After the result, acting chief executive Tim Carter told The Post that more farmers had signed up for milk contracts with Synlait in recent months, which would secure the company’s milk supply until 2027 and beyond.

“A lot of people have been working hard for a long time and it hasn’t had the right outcome. But getting this outcome is exciting.”

“We have more interest around new milk [suppliers] coming on from other processors. The sheer amount of interest means we’ve got our core of supply and we have new milk suppliers, so supply will be ongoing,” Carter said.

“Synlait farmers are looking for a proof point that things are going well, and this result has done that,” he said. “It’s a significant improvement on six months ago. We have confidence for 2027 and beyond.”

The company had 204 suppliers in the South Island and said a majority of those had not ceased their contracts. But he did not confirm how many had stuck around or how many North Island suppliers chose to keep their contracts.

Carter told investors Canterbury farmers were its suppliers of choice as their proximity to the company’s Dunsandel plant meant smaller logistics costs compared with transporting milk to its Pōkeno plant.

“We still support our North Island farmers and have a handful of those. We’re working with them on their supply contracts as they make their decision,” he said.

Carter said farmer sentiment was buoyed by record milk prices and solid global demand, with its subsidiary Dairyworks signing an agreement last month to supply the Annam Group in Vietnam to supply 87 stores.

Outlook

But Carter said the company was “not getting ahead of ourselves”.

“We still have a job to do, that’s the key message,” he said.

Although headwinds are expected in the second half of the full-year, he said that’s likely to be offset by weaker local exchange rates that have led to strong volume demand.

Chief financial officer Andy Liu told investors that foreign exchange rates and a weaker New Zealand dollar led to a $14-15 million revenue boost in the half-year which was likely to soften in the second half.

On geopolitical risks curbing further growth, Carter said, “There’s uncertainty everywhere, not just in the US.”

He said the company was assessing the impact of foot and mouth disease in Europe but said it was focused on “what we can control”.

“We need to strengthen our farm offering and deliver for existing and new customers. Our biggest issue was getting more demand, so we’re making good progress.”

He said strengthening the core business meant it could absorb any unpredictable, external market “jolts” in the short-term.

“There are still headwinds but those are outweighed by strength in the sector,” Carter said, with global milk demand likely to stay elevated.

Carter would return to his role as chief executive of Dairyworks in May, and said he was excited for former Westland Milk chief executive Richard Wyeth to take the reins.

“I’m disappointed not to be in the role long-term but I understand the skills and experience the board was looking for,” he told The Post.

“[Wyeth] has a lot of great experience in the sector so that will set us up well.”