Synlait CEO Resignation Highlights Deeper Challenges Facing Dairy Processor
A revolving door of chief executives at milk processor Synlait is a warning sign, says Lincon University senior lecturer in agribusiness Nic Lees.
Watson, who stepped down last week, says now feels like the right time to leave the company following a turbulent period at its helm.
“It’s been quite the journey, I have to say, over the last two-and-three quarter years, but I’m really proud of the reset we’ve taken the business,” he told Dairy News. “So, for me, it certainly feels like the right time to leave.”
Watson’s decision follows a disappointing financial result which saw a 61% profit loss and a 221% drop in operating cashflow.
Those followed a difficult year for Synlait, one in which many farmers issued cessation notices.
However, Watson says he’s confident that “the business has really good momentum”.
“Financially, 2025 should be a really good year for Synlait, and for me personally, it’s time to decompress, time to spend some time with my family,” he says.
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Despite the turbulence of the past few years, Watson says there have been some successes, among them the recapitalisation plan which took effect earlier this month.
The plan saw Bright Dairy of China increase its shareholding in Synlait from 39% to 65%, while a2 Milk Company’s stake remains at 19%.
“Between the shareholder loan from Bright Dairy and the equity from Bright Dairy and a2, injecting $350 million of new capital into the business when you’re sitting on a market capitalisation of $70 million is a real achievement,” Watson says.
He adds that another significant milestone in his time as chief executive was the strategy reset which he says enabled the company to diversify growth. “We’ve now commercialised the plantbased product in the North Island. We’ve also launched the highly profitable foodservice cream in the South Island.”
Coming off a tumultuous financial year, Watson says Synlait will need to continue its newfound momentum.
“Off the back of the reset, we’ve been through the foundations of the business,” he says. “We’ve paid down debt, we need to keep going.”
He says that in terms of lifting production, demand, and cost, the company has experienced good momentum. “That needs to continue to increase profitability.”
Finally, Watson says it will be important for the company to retain its suppliers.
“Obviously, we’ve had a lot of cease notices that were put into the company and we’ve put a programme in place to withdraw those cease notices and that’s been received really well, but it’s about making sure that that milk supply moving forward is shored up and gives the company the certainty it needs,” he says.
Watson will be replaced temporarily by Dairyworks chief executive Tim Carter, who has been appointed acting CEO of the company from 21 October.
