Revenue +18.8% on Dairyworks but PBT -77.0% as infant formula slid 16%

PBT fell 77.0% to NZ$8.5m and NPAT fell 75.6% to NZ$6.4m. Operating cash flow swung to an outflow of NZ$69.1m from a NZ$12.2m inflow. Inventory days reached 111.4 — above the supplied historical range, where the 5-period mean is 88.8 days and the range is 68.9–110.6 days — as inventories grew to NZ$406.4m from NZ$306.4m. Net debt/EBITDA stands at 10.1x.

Inventory days have pushed above their historical range while core volumes are shrinking. The combination of 111.4 days of inventory and a 16% decline in consumer-packaged infant formula points to demand softness rather than ordinary seasonal working-capital build. This matters because it raises the risk of margin pressure on stock already on the balance sheet and reduces the value of the operating-leverage thesis behind Synlait's premium IF capacity.

2. Revenue growth is M&A-driven, not organic. Stripping out Dairyworks, core nutritionals, ingredients and fresh milk revenue is roughly flat versus prior. This matters because Synlait's strategic identity has been built on premium infant formula, and the segment that justified the capex history is the segment now contracting in volume.

3. Earnings quality is flattered by a tax credit. The effective tax rate swung to -24.7% from +29.0% in the prior comparable, so the headline NPAT decline of 75.6% understates the operating deterioration visible at PBT (-77.0%) and at EBITDA, which the release notes was down 29% to NZ$47.7m.

To match FY20 NPAT of NZ$75.2m, the second half would need to deliver roughly NZ$69m from a current half-year base of NZ$6.4m, against headwinds in IF volumes, an above-range inventory position, and operating cash outflow. No forward target was disclosed in the supplied data, so the release does not support a quantitative second-half bridge.

First, the revenue uplift is acquisition-led and masks contraction in the core. Second, while OCF/EBITDA of -144.8% sits within Annolyse's historical baseline (5-period mean -222.3%), the absolute cash position deteriorated: pre-lease free cash flow worsened to -NZ$131.7m from -NZ$75.2m. Third, the tax credit lifted NPAT relative to PBT in a way that will not recur on the same basis.

Capex moderated to NZ$62.6m, or 9.4% of revenue (down from 15.6%), but this restraint did not prevent net debt from rising to NZ$482.0m and leverage from holding at 10.1x. Operating working capital absorbed NZ$31.8m — within the supplied historical range of builds and releases — with the build concentrated in inventory rather than receivables. ROE fell to 0.8% from 5.0% on a larger equity base.

This briefing cannot assess customer-specific dynamics, channel inventory positions at Synlait's key infant formula customers, or any forward guidance, because none of those are present in the supplied disclosure data.