What changed
Revenue from continuing operations rose 11.2% to NZ$992.6m, with total revenue (including other income) reaching NZ$1,022.8m (+14.4%). EBITDA grew materially faster than revenue, up 30.4% to NZ$155.0m, reflecting operating leverage and the absence of Mataura Valley Milk's prior-year drag of NZ$11.9m EBITDA loss. PBT from continuing operations rose 27.7% to NZ$162.5m — the cleanest operating read this period.
Statutory NPAT of NZ$10.9m looks alarming against the prior period's NZ$91.7m but is not an operating deterioration. The divergence is entirely explained by a NZ$103.7m after-tax loss from the discontinued operation (the Mataura Valley Milk divestiture), which sits below the operating line. Continuing-operations profit after tax was NZ$112.1m.
Segment mix shifted further toward China and Other Asia, which grew 20.3% to NZ$739.0m and now represents roughly 74% of reportable-segment revenue, up from about 68% in HY25. ANZ was stable at roughly 17% of revenue. The USA remained loss-making but its EBITDA loss narrowed to NZ$3.4m from NZ$4.9m.
Cash fell NZ$145.2m to NZ$896.9m, primarily reflecting the Mataura Valley Milk disposal and the first full period of dividend payments. Gross borrowings are now zero, down from NZ$66.8m in the prior comparable period. The interim dividend was lifted 35.3% to NZ$0.115 per share.
What matters
The discontinued-operation loss obscures an operationally strong period. The NZ$103.7m post-tax loss from Mataura Valley Milk's disposal is a one-time structural exit, not a recurring earnings drag. Analysts and investors anchoring to headline NPAT will misread the result. PBT growth of 27.7% and continuing-operations NPAT of NZ$112.1m are the relevant comparators. The business exited a perennially loss-making segment, which improves the quality of the earnings base going forward.
China concentration is both the engine and the key risk. China and Other Asia contributed the overwhelming majority of EBITDA improvement, and its revenue share continues to climb. The implied segment EBITDA margin of ~22.7% in HY26 is slightly below the ~24.1% achieved in HY25, suggesting margin dilution as revenue scale increases — likely from channel or promotional mix. Whether that compression is structural or temporary is the most consequential earnings-quality question for this business.
Cash conversion softened and capex is stepping up. OCF-to-EBITDA slipped to 61.4% from 66.3%, meaning EBITDA is outrunning cash generation. Capex more than tripled to NZ$9.1m from NZ$2.4m, consistent with the stated supply-chain transformation. Pre-lease free cash flow of NZ$86.1m still covers the interim dividend (payout ~96.6% of pre-lease FCF), but there is little headroom. If capex continues to accelerate in H2, dividend coverage tightens.
Expectations
The business has a mild second-half weighting. In FY25, HY25 contributed only 43.3% of full-year EBITDA and 39.1% of full-year operating cash flow, implying a materially stronger second half. Annualising HY26 revenue gives approximately NZ$2.05bn, already roughly 7.7% above FY25's record NZ$1.90bn, before any H2 seasonal uplift.
The company states FY26 full-year guidance was upgraded, but no quantified target is provided in the disclosed materials. Without a numerical anchor, it is not possible to assess the gap between the current run-rate and management's stated ambition. What the result does support is that the first half is tracking comfortably ahead of the FY25 comparable half on all operating metrics. What it does not yet answer is whether the China label IMF regulatory environment, pricing pressure, or the ongoing supply-chain investment will create headwinds in H2.
IMF revenue grew 13.6%, led by both English-label and China-label channels. The strength of English-label demand is particularly notable given the recovery context flagged in HY25; whether that recovery has now fully run or still has runway is not quantified.
Quality of result
The operating result is largely durable. Revenue growth is broad-based across the two profitable segments, EBITDA leverage is real (margin expanded from approximately 13.3% to 15.6% of sales), and the exit from Mataura Valley Milk removes a structural cost. Inventory fell NZ$19.2m, suggesting channels are not being stuffed to generate revenue, which is a modest positive quality signal.
The main timing risk is in the China segment margin: the slight compression from ~24% to ~23% could reflect timing of promotional spend, pricing resets for the new China label regulatory cycle, or genuine mix effects — the filing does not disaggregate this sufficiently to judge.
Cash conversion deteriorating while EBITDA accelerates is worth watching. The working-capital picture is incomplete because receivables are not separately disclosed, so it is not possible to determine whether the OCF-to-EBITDA slippage reflects debtor timing or something structural. The significantly elevated capex is disclosed as supply-chain related and is therefore investment-driven rather than maintenance-driven, but it is a cash drain nonetheless.
The dividend increase is well-supported by operating free cash flow, not by the distorted NPAT figure. The ROE of 0.8% on statutory NPAT is meaningless this half; on continuing-operations NPAT of NZ$112.1m the return is far more respectable, though still modest relative to the NZ$896.9m cash pile sitting largely undeployed.
Unresolved
- The quantified FY26 guidance upgrade figure is not disclosed in the supplied materials, making it impossible to assess how much of the upgrade has already been delivered in H1 versus what is implied in H2.
- The China segment EBITDA margin compression (~140bps) is unexplained: whether this is promotional investment, mix shift, channel rebates, or pricing pressure is not disaggregated.
- Receivables are not separately disclosed, so working-capital quality and debtor-day trends cannot be assessed — a material gap given the concentration of revenue in single-channel China label IMF distribution.
- The supply-chain transformation capex programme has no disclosed quantum, timeline, or expected return; the step-up to NZ$9.1m in H1 may represent early-stage investment or may accelerate substantially.
- The ultimate cash cost of the Mataura Valley Milk exit beyond the NZ$103.7m post-tax loss — including any residual warranty, indemnity, or working-capital obligations — is not quantified.
This briefing cannot assess the competitive or regulatory dynamics within the China IMF market that will determine whether the 74%-concentrated China segment can sustain or expand its current margin trajectory.
Key metrics
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | $992.6m | $892.8m | +11.2% ↑ |
| EBITDA | $155.0m | $118.9m | +30.4% ↑ |
| Net profit after tax | $10.9m | $91.7m | -88.1% ↓ |
| Net cash inflow from operating activities | $95.2m | $78.8m | +20.8% ↑ |
| Declared dividend per share | 11.5c | 8.5c | +35.3% ↑ |
| Operating profit | $146.3m | $104.0m | +40.8% ↑ |
| Profit before tax | $162.5m | $127.3m | +27.7% ↑ |
| Cash and cash equivalents | $896.9m | $1042.0m | -13.9% ↓ |
| Total assets | $1845.2m | $1895.4m | -2.6% ↓ |
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| China and Other Asia | $739.0m | $614.2m | $167.6m | +6.9pp |
| Australia and New Zealand | $171.3m | $157.7m | $33.2m | -0.1pp |
| USA | $83.2m | $64.5m | −$3.4m | +1.3pp |
| Mataura Valley Milk | — | $73.1m | — | n/a |
Analytical metrics
| Metric | HY26 | HY25 | Context |
|---|---|---|---|
| PBT growth | +27.7% | — | cleaner earnings measure |
| Effective tax rate | 31.0% | 34.0% | — |
| OCF / EBITDA (cash conversion) | 61.4% | 66.3% | deteriorated |
| FCF pre-lease | $86.1m | $76.4m | +$9.7m |
| FCF / NPAT | 788.7% | 83.2% | complementary conversion metric |
| Capex % revenue | 0.9% | 0.3% | — |
| Capex | −$9.1m | −$2.4m | −$6.6m |
| Net debt | −$896.9m | −$975.3m | +$78.4m |
| Net debt / EBITDA | -5.79x | -8.21x | Weakening |
| Gross borrowings | $0.0m | $66.8m | −$66.8m |
| Payout ratio vs NPAT | 761.6% | — | — |
| Payout ratio vs FCF pre-lease | 96.6% | — | covered |
| ROE (annualised) | 0.8% | 6.8% | Weakening |
| HY25 share of FY25 revenue | 47.0% | — | Other half was 53.0% |
| HY25 share of FY25 EBITDA | 43.3% | — | Other half was 56.7% |
| HY25 share of FY25 NPAT | 45.2% | — | Other half was 54.8% |
| Profit from continuing operations | $112.1m | — | — |
| Discontinued operation after tax | −$103.7m | — | — |
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX/ASX company announcements. The underlying data is extracted from official company filings and verified against source documents. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.