Bright Dairy and Synlait Milk: Analysis of Overseas Business Strategic Adjustments Amid Sustained Losses

Synlait Milk Limited, the core overseas subsidiary of Bright Dairy, has faced severe financial challenges in recent years. According to public financial data, Synlait recorded a net loss of

(approximately RMB 8.4 billion) in FY2024, a record high in the company’s history [1]. The main reasons for the loss include asset impairment provisions and sustained operating losses.

Synlait’s financial distress can be traced back to the combined effect of multiple factors. First, the company experienced a major partner dispute in 2024, facing the risk of capital chain rupture and debt default, and was reported to have difficulty repaying a NZ$130 million loan on schedule [2]. Second, persistent inflationary pressures in New Zealand have led to significant increases in raw material prices and labor costs, further compressing the company’s profit margins.

In Q3 2024, Synlait conducted a large-scale asset impairment test and recognized an asset impairment loss of approximately

[3]. This impairment mainly resulted from the continued deterioration of profitability in some of the company’s production facilities and business segments. In addition, the company faced a net financing cost of approximately , further increasing its financial burden.

Synlait’s share price plummeted in 2024, falling to a record low of approximately NZ$0.3 per share. Facing such a severe situation, Bright Dairy, as the controlling shareholder, had to take measures to provide assistance.

Facing Synlait’s financial crisis, Bright Dairy launched a large-scale rescue operation. Throughout 2024, Bright Dairy injected over

into Synlait through various channels [2]:

• In July 2024, Bright Dairy International Investment Co., Ltd., a wholly-owned subsidiary of Bright Dairy, provided a
  NZ$130 million
  loan to Synlait to help it repay maturing debts
• In October 2024, Synlait issued approximately 308 million new shares to Bright Dairy Holdings Co., Ltd. in a private placement, raising
  NZ$185 million
• Achieved absolute control of the loss-making company with a nearly 100% premium (NZ$0.6 per share)

Notably, while rescuing its subsidiary, Bright Dairy’s own financial situation has also deteriorated. As of the end of September 2024, Bright Dairy’s core financial indicators showed pressure:

Financial Indicator	Value	Year-on-Year Change
Operating Cash Flow	RMB 844 million	-18.43%
Asset-Liability Ratio	53.53%	Continued to rise
Short-Term Borrowings	RMB 2.14 billion	+45.94%
Non-Current Liabilities Due Within One Year	RMB 1.069 billion	-
Cash and Cash Equivalents	RMB 3.361 billion	-

In addition, Bright Dairy recorded operating revenue of approximately RMB 18.413 billion in the first three quarters of 2025, a year-on-year decrease of 10.89%; its net profit was RMB 116 million, a sharp drop of 63.94% [2].

On September 28, 2025, Bright Dairy announced a major asset disposal decision: its subsidiary Synlait Milk intends to sell its core North Island assets to New Zealand Abbott, a subsidiary of Abbott, for

(approximately RMB 1.21 billion) [4]. The transaction is scheduled to be completed in April 2026.

This transaction has been interpreted by the market as a “bold self-rescue” move by Bright Dairy. By selling loss-making assets, the company can not only obtain a considerable cash inflow but also effectively reduce its asset-liability ratio and ease financial pressure.

Bright Dairy’s decision to sell Synlait’s North Island assets is based on the following strategic considerations:

. The North Island assets have been in a state of loss for a long time, continuously eroding the profits of the listed company. By selling this asset, Bright Dairy can completely divest the loss-making business and improve overall profitability.

. The proceeds from the sale will be mainly used to repay debts, reducing the company’s financial leverage and interest expense burden.

. By streamlining its overseas business layout, Bright Dairy can concentrate resources on more competitive business segments and improve overall operational efficiency.

Despite the difficulties, Synlait’s management actively promoted its business recovery plan in 2025. According to the company’s financial guidance, for FY2025:

• Reported net loss will narrow significantly to
  NZ$27 million to NZ$40 million
  , a marked improvement compared to the NZ$1.821 billion loss in FY2024
• Underlying EBITDA is expected to reach
  NZ$100 million to NZ$110 million
  , more than double the NZ$45.2 million in FY2024 [5]

Synlait’s performance improvement mainly benefits from the following factors:

• Growth in advanced nutrition business
  : The advanced nutrition segment has performed strongly, becoming the main driver of performance recovery
• Stable ingredients business
  : The raw materials business unit has demonstrated good profitability and risk resistance
• Cost control measures
  : The company continues to implement strict cost control, effectively reducing operating expenses

Looking ahead, Synlait is adjusting its business focus:

• Focus on high-value-added products
  : Increase investment in high-end products such as infant formula milk powder and formula foods for special medical purposes
• Deepen cooperation with strategic customers
  : Maintain cooperative relationships with key customers such as a2 Milk Company
• Optimize raw milk supply
  : Provide additional milk premium incentives to South Island dairy farmers to ensure stable raw material supply

In 2025, China’s dairy industry is in a period of in-depth adjustment. According to industry data, the full-channel sales of dairy products in the first three quarters of 2025 decreased by 16.8% year-on-year, with most listed dairy companies facing performance pressure [1]. Leading enterprises such as Yili and Mengniu have also experienced slowed growth or profit declines.

Against the backdrop of industry adjustment, a wave of sales and mergers has swept the dairy industry:

• Mengniu sold its New Zealand Yashili factory to a2 Milk Company and divested its stake in Mataura Milk
• Enterprises such as Modern Dairy and New Hope have carried out business integration
• New Hope Dairy expanded against the trend, investing RMB 111 million to acquire relevant dairy assets in Fujian

This trend reflects that the dairy industry is undergoing structural reshaping, with enterprises responding to market changes through optimized asset allocation.

1. Complex causes of Synlait’s losses
   : Synlait’s sustained losses are the result of a combination of internal operational issues and external environmental pressures, including asset impairment, rising costs, and partner disputes.
2. Bright Dairy faces a dilemma
   : Having to rescue its overseas subsidiary while under its own financial pressure reflects the difficult choices Bright Dairy faces in its internationalization strategy.
3. Asset sale is a rational choice
   : Selling the North Island assets for RMB 1.21 billion is a rational decision for Bright Dairy, helping the company stop losses, reduce pressure, and optimize its financial structure.
4. Initial results of Synlait’s recovery
   : FY2025 performance guidance shows that Synlait’s business recovery plan is progressing as expected, with the loss range narrowing significantly.

• Transaction execution risk
  : The sale of Synlait’s North Island assets is subject to preconditions, and the completion time is uncertain
• Exchange rate risk
  : Cross-border transactions involve fluctuations in the exchange rate between the New Zealand dollar and the Chinese yuan
• Industry cycle risk
  : The overall adjustment cycle of the dairy industry may continue, affecting the speed of the company’s performance recovery

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[1] Price War, M&A Wave, and the Resurgence of Affordable Milk: The Dairy Industry’s ‘Song of Ice and Fire’ in 2025

[2] Injecting Capital into Subsidiary, High Liabilities, Declining Performance, and Lost Market Share: Where is Bright Dairy’s Future Headed?

[3] Synlait Milk Limited HY25 Condensed Interim Financial Statements

[4] Bright Dairy Sells New Zealand Assets for US$170 Million: Stopping Losses, Self-Rescue, and the Dilemma of Falling Behind

[5] 2025 a very busy year for dairy companies on the global stage