Friday, 20 March 2020 13:07

Synlait remains positive, despite 30% profit decline

Written by  Staff Reporters
Synlait chief executive Leon Clement. Synlait chief executive Leon Clement.

Despite a decline in half-year profit, Synlait is assuring shareholders it will regain shareholder value. 

Read: Synlait Milk concerned with Covid-19.

For the six months ended January 2020, Synlait’s net profit after tax fell 30% to $26.2 million, compared to $37.3 million in its 2019 half-year report. 

The independent milk processor says the decline is a result of higher depreciation and interest costs as a result of increased investments.

Total half-year revenue increased by 19% to $559 million and total milk processed grew by 8.5%.

Synalit says its core earnings growth remains sound, however the time and costs of creating new growth opportunities has impacted profitability short-term. 

“This is not a reflection of core business non-performance, but a moderation of our own expectations against the investments we are making for our future,” the company wrote to its Shareholders.

“Yes, adjusted assumptions around our infant formula base sales, consumer-packaged infant formula volumes, and lactoferrin pricing mean we will not be able to absorb the costs of standing up our new investments this year – but long-term confidence in our business remains unchanged.”

Last month, Synlait updated it forecast net profit after tax for the full year 2020 to be between $70 million to $85 million. 

“We recognise this was not expected, but it forms part of Synlait’s acceptable risk story, which we have been upfront about as we work to diversify and grow. 

“Yes, we hoped to increase asset utilisation and earnings at a faster rate, but we remain confident that decisions made will regain shareholder value over the medium to long-term. Delivering on this is front of mind for the board and executive team.”

More like this

M.I.A.

OPINION: The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released by the Treasury.

Synlait snag

OPINION: Canterbury milk processor Synlait's recovery seems to have hit another snag.

Gaslight much?

OPINION: Labour leader Chris 'Chippy' Hipkins is carrying on the world-class gaslighting of the nation that he and his cohorts started after their disastrous Covid response; now trying to undermine the Covid inquiry to protect his own backside.

Sorry, not sorry

OPINION: Did former PM Jacinda Ardern get fawning reviews for her book?

Synlait's back

OPINION: After years of financial turmoil, Canterbury milk processor Synlait is now back in business.

Featured

$2b boost in NZ exports to EU

New Zealand’s trade with the European Union has jumped $2 billion since a free trade deal entered into force in May last year.

US tariffs hit European ag machinery markets

The climate of uncertainty and market fragmentation that currently characterises the global economy suggests that many of the European agricultural machinery manufacturers will be looking for new markets.

Tributes paid to Jim Bolger

Dignitaries from  all walks of life – the governor general,  politicians past and present, Maoridom- including the Maori Queen, church leaders, the primary sector and family and  friends packed Our Lady of Kapiti’s Catholic church in Paraparaumu on Thursday October 23 to pay tribute to former prime Minister, Jim Bolger who died last week.

National

Machinery & Products

» Latest Print Issues Online

Milking It

Fonterra vote

OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.

Follow the police beat

OPINION: Politicians and Wellington bureaucrats should take a leaf out of the book of Canterbury District Police Commander Superintendent Tony Hill.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter