Synlait Milk CEO Grant Watson has announced his resignation after guiding the New Zealand-based dairy and infant formula company through a challenging year. The announcement came on October 21, with chairman George Adams stating that Watson is taking a hiatus “before deciding his next career move.”
As Synlait begins the process of finding a successor for Watson, who has been at the helm since January 2022, Tim Carter will serve as the interim CEO. Carter is currently the head of the Dairyworks subsidiary, with Aaron Kenny stepping into his role on a temporary basis.
In a recent development, Synlait revealed that it had secured NZ$218 million ($132.1 million) in equity financing to strengthen its financial stability, especially after receiving a NZ$130 million bailout loan earlier this year from its largest shareholder, China’s Bright Dairy.
Watson has also recently completed a significant debt restructuring with creditors and resolved a protracted contractual and pricing dispute with The A2 Milk Company, its second-largest shareholder. After participating in the equity financing, Bright Dairy now holds a 65.3% stake in Synlait, while A2 Milk owns 19.8%.
In a statement, Watson expressed his pride in leading Synlait, remarking, “Synlait is an amazing and agile company, which I have been honoured to lead. Working with our passionate employees and farmers who care deeply about Synlait’s success has been a privilege.”
The incoming CEO will have the critical task of steering Synlait back toward profitability and managing its debt levels. The company reported a modest revenue increase of 2% to NZ$1.64 billion for the year ending July 31. However, it faced significant challenges, delivering an EBIT loss of NZ$182.7 million compared to a NZ$31 million profit during the same period last year.
Moreover, net profit after tax plummeted to NZ$182.1 million, contrasting sharply with a loss of NZ$4.3 million the previous year. Synlait’s current debt stands at NZ$551.6 million, marking a 33% rise from the prior fiscal year.
On the trading front, Synlait’s share price saw a decline, closing the New Zealand session down 8% at NZ$0.40, with a 2.6% drop in Australia to close at 37 Australian cents. Chairman Adams acknowledged the myriad challenges Synlait has recently faced and praised Watson for effectively navigating these hurdles, particularly the successful reset of the company’s balance sheet.
In the dynamic landscape of the food and beverage industry, the effective leadership and strategic foresight demonstrated by Watson have been crucial. The new leadership will need to focus on food and drink consumer trends to adapt and thrive in this competitive market. Understanding evolving consumer preferences and enhancing operational efficiencies will be instrumental in steering Synlait towards a more profitable future.
