By David Winning
SYDNEY–Synlait Milk said it expects higher earnings in the 2024 fiscal year, even if dairy demand in China remains lackluster and there is no let up in cost pressures.
Synlait reported earnings before interest, tax, depreciation and amortization–or Ebitda–of 90.7 million New Zealand dollars (US$54.0 million) in the 12 months through July, down 31% on year. Annual revenue from continuing operations fell by 5% to NZ$1.32 billion, and Synlait said it wouldn’t pay a final dividend.
The dairy supplier reported a statutory net loss of NZ$4.3 million, which included some discontinued operations. Chief Executive Grant Watson said Synlait’s poor financial performance reflected factors including material reductions in customer demand, carbon-dioxide shortages, extreme weather events, the Covid-19 pandemic, and inflationary impacts on its cost base.
Turning to the outlook, Synlait said some of the those factors could be headwinds to its earnings in the 2024 fiscal year.
“Synlait could still face challenging China market dynamics, softening global conditions more generally, and continued inflationary pressures across its cost base, which could impact future customer demand and the company’s overall profitability,” the company said.
Still, Synlait said it expects Advanced Nutrition volumes to continue to grow at the Pokeno site in fiscal 2024 and “the company’s overall Ebitda performance is also expected to improve in FY 2024, compared to FY 2023.”
Synlait reiterated that it disputes a2 Milk’s recent decision to cancel its exclusive manufacturing and supply rights for some infant milk formula products. The disagreement will trigger negotiations between the companies and potentially arbitration proceedings.
Write to David Winning at [email protected]
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