Source: Radio New Zealand
The company is a key supplier to A2 Milk. Synlait/supplied
Dairy company Synlait is forecasting a hefty half-year loss as its recovery takes longer than hoped.
The company has forecast a net loss after tax of between $77 million-$82m for the six months ended January.
The company – a key supplier to A2 Milk – said manufacturing challenges at its Dunsandel plant in Canterbury had been resolved, but the need to rebuild inventory pushed up costs, forcing Synlait to sell more raw milk at low margins.
Lower returns from commodities and a conservative approach to tax accounting also dragged down the results.
Chief executive Richard Wyeth said the company was “very disappointed” with the half-year result and the slower than expected pace of the turnaround.
He said there had been progress in the company’s operations, with a refreshed Canterbury-based leadership team and the asset sale (of its North Island businesses) helping strengthen the business.
“Our strategy is being reset, and we are confident it will provide a pathway to return Synlait to success, although this will take at least 12 months,” he said.
The company’s sale of its North Island operations was still expected to go through on 1 April, with the proceeds to be used to pay down debt.
Synlait said the sale would allow it to refocus on its core operations in Canterbury.
Along with a heavy bottom line loss, Synlait also expected an operating loss of between $28m-33m, and an underlying loss of $33-38m.
Synlait had an insurance claim approved that would cover part of the losses linked to its manufacturing issues, but the final amount and timing of the payout were still being worked out.
The insurance payout would be added back into the accounts at a later date, and the figures were subject to an audit.
Synlait said it was in active talks with its banking syndicate as it worked towards completing the North Island asset sale.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand