But this week the company, which describes itself a “game changer” in the industry, reported a $96 million first-half loss and plans to offload under-performing assets in an effort to turn its fortunes around.

Shares in the former dairy industry darling, which once traded at more than $13, slumped to just 67 cents after the result was revealed on Tuesday.

Trouble has been brewing at the company for years.

Here’s where things started to go wrong.

Pre-pandemic spend-up

Pre-Covid pandemic, Synlait went on a spending spree, dropping $280 million on a manufacturing plant at Pokeno, $125m on a new liquid plant at Dunsandel and $150m on cheese companies Talbot Forest Cheese and Dairyworks.

Although intended to boost the diversity of Synlait’s products, markets and customers and reduce its reliance on its largest customer, The A2 Milk Company, the purchases haven’t really paid off.

Synlait is now considering selling the Pokeno plant which, despite an extra investment of $70m to fit the facility out for plant-based milk manufacture, is still underutilised.

In June 2023, it also announced it would look to sell the Dairyworks and Talbot Forest businesses to reduce debt and focus on higher margin areas of its portfolio.

Pandemic problems

Few companies had a smooth ride through the Covid-19 pandemic and Synlait wasn’t one of them.

The business was caught up in the turmoil of its largest customer, The a2 Milk Company, which saw an initial surge in orders from China as families panic-bought infant formula, followed by a slump in demand once cupboards were full.

The rollercoaster was reflected in Synlait’s share price, which climbed from $4.70 as lockdown loomed in March 2020 to more than $7.50 three weeks later.

But the rebound was short-lived and the share price began to slide again in late July. By the end of 2020, it was back below $5.

Dispute with a2 Milk

In September last year, a2 Milk, an almost 20% shareholder, cancelled (or at least attempted to cancel) Synlait’s exclusive supply agreement, a move which saw the share price slump to a then-record low $1.18.

a2 said Synlait had fallen “below delivery standards” and its status as a2’s sole supplier for infant formula products to China couldn’t be maintained.

Synlait and The a2 Milk Company have entered arbitration to resolve a dispute over supply.
SUPPLIED / SUPPLIED

But Synlait clapped back, saying a2 didn’t have the right to cancel the agreement and that its Dunsandel plant was licensed by Chinese authorities to make a2 Milk products.

Although the companies gave negotiations a go, they have since entered arbitration.

Changes at the top

The list of recent arrivals and departures at Synlait reads like an airport flight board and points to disagreement over the best way forward, analysts say.

Chief financial officer Angela Dixon resigned in May 2021, a month after the sudden departure of chief executive Leon Clement.

Dixon was replaced by Synlait general manager of supply chain Rob Stowell, while co-founder John Penno returned as interim chief executive. That role was eventually filled by Grant Watson.

The company’s board has also been in a state of flux.

Penno donned the chairperson’s hat in January 2022, taking over from Graeme Milne, and was replaced by Simon Robertson in December of the same year.

Robertson resigned just 10 months later, with Paul McGilvary stepping into the role.

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