Synlait swung to $7.5m PBT on 40.4% revenue jump and deleveraging to 6.2x

Revenue rose 40.4% to $916.8m, an unprecedented step-up against the supplied historical pattern (5-period mean 1.0%, range -15.2% to 19.0%), and EBITDA tripled to $63.1m from $19.9m. PBT swung to $7.5m from -$94.9m (+107.9%) and NPAT to $4.8m from -$96.2m (+105.0%). Note the prior comparable also carried a -$26.2m discontinued-operation loss; continuing-operations NPAT in HY24 was -$70.0m, so the underlying swing is still material but smaller than the headline gap suggests.

Net debt fell to $391.9m from $530.5m and gross borrowings dropped 25.2% to $440.9m, taking net debt to EBITDA to 6.2x from 26.7x — the lower edge of the company's historical range (4-period mean 14.4x). Operating cash flow remained negative at -$12.0m but improved from -$98.1m.

The 40.4% revenue jump is well above the supplied historical baseline and was accompanied by a 10.9x lift in EBITDA. With Ingredients ($342m, 4.2% derived margin) carrying volume and Advanced Nutrition ($274m, 21.5% margin) carrying profitability, the mix story matters: Ingredients drives scale but does little for margin, while Advanced Nutrition contributed $58.8m of the $91.5m in segment results. Foodservice remains loss-making at -$1.3m on $20m of revenue.

Deleveraging materially restores financial flexibility. Net debt is down ~$138.6m and leverage at 6.2x is the lowest in the supplied four-period history, well below the 14.4x baseline. Total liabilities fell 13.5% and equity rose 14.0% to $796.7m, consistent with the October capital raise referenced in the release. This matters because the prior leverage profile constrained Synlait's strategic options; at 6.2x it is still elevated for a dairy processor but no longer in distress territory.

Cash conversion improved but stayed negative. OCF/EBITDA was -19.1% versus -493.0% in HY24, classified at the upper edge of Synlait's historical range. The improvement is real, but the business still consumed cash at the operating line in a strongly seasonal first half. Investors cannot yet treat the EBITDA recovery as cash-backed.

The release notes EBITDA was "just above the guidance range announced in January 2025," indicating the company met its own near-term bar. The supplied second-half shape context is unreliable: HY24 represented 39.9% of FY24 revenue but -0.5% of FY24 EBITDA and 52.8% of FY24 NPAT, because FY24 carried large second-half write-downs (full-year EBITDA was -$4.1b). Annualising HY25 revenue would imply $1.8b versus FY24 reported revenue of $1.6b, but the seasonality assumption embedded in that figure cannot be supported from the supplied data.

The release does not state H2 milk-price assumptions, customer-contract phasing, or capex plans, so the read-through to FY25 is limited to: EBITDA delivery met the company's own range, and leverage has been reset.

The effective tax rate was -35.9% — an unprecedented low against a 5-period mean of 14.7% — meaning a tax credit lifted reported NPAT above what a normalised charge would deliver. PBT growth of 107.9% versus NPAT growth of 105.0% is a narrow 2.9pp gap, so the distortion is modest in this period, but the credit itself is non-recurring in nature and PBT is the cleaner read on operating recovery.

Working capital sent mixed signals. Inventory days fell to 68.9 from 88.2 (below the historical 105.7-day mean), supporting the cash-flow improvement, but absolute inventories rose $30.8m to $347.1m as revenue scaled. Debtor days edged up to 36.1 from 30.5 (upper edge of range). FCF pre-lease was -$23.4m, with capex 31.9% lower at $11.4m (1.2% of revenue) — capex restraint, not operating cash, did much of the work on free cash flow.

• EBITDA $63.1m → OCF -$12.0m: the $75.1m gap is dominated by working-capital build and interest cost, not non-cash add-backs.

This briefing cannot assess milk-price assumptions, customer concentration, or H2 demand visibility, none of which are quantified in the supplied materials.