Feb 4 (Reuters) - New Zealand's Synlait Milk warned on Wednesday it will swing to a first-half loss in fiscal 2026, as rising costs and lingering operational strains deepen pressure on the embattled dairy
processor, sending its shares to a five-month low.
Shares fell 10.2% to NZ$0.57 by 2206 GMT, their weakest level since August 18, sharply underperforming the benchmark's 0.4% decline.
Synlait said it has fixed most production problems at its main Dunsandel plant, but the fallout continues to strain the business through higher costs.
The earlier delays left its stock-rooms low, so the company had to spend this dairy season rebuilding inventory across several product lines.
The dairy producer forecast a reported net loss after tax of between NZ$77 million ($46.55 million) and NZ$82 million for the half-year ended January 31, compared with a NZ$4.8 million profit a year earlier.
The company has posted annual losses for three straight years, weighed down by manufacturing challenges, elevated operating costs, weak customer demand, and restructuring charges.
The Canterbury-headquartered company said profits were squeezed because it had to sell more low‑margin raw milk instead of processing it into higher‑value products.
"We are very disappointed with the six-month result and the impact it has had on the pace of our financial turnaround," Synlait CEO Richard Wyeth said.
Returns from its commodities portfolio were weaker as global dairy prices softened, with New Zealand milk prices pressured by strong supply and muted offshore demand.
Synlait said reported earnings before interest and tax are expected to be between NZ$28 million and NZ$33 million for the first half, lower than the NZ$34.1 million logged last year.
The company has flagged the sale of its North Island assets as central to its turnaround, after years of losses and rising debt linked to underperforming operations. The sale is due for completion on April 1.
The divestment is aimed at shoring up liquidity and allowing the company to focus on its Dunsandel plant, though management has warned the recovery will be gradual.
($1 = 1.6540 New Zealand dollars)
(Reporting by Jasmeen Ara Shaikh in Bengaluru; Editing by Tasim Zahid)
