Wednesday, 17 April 2024 12:00

Poor investments backfire

Written by Milking It

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OPINION: Synlait's financial woes won’t be going away anytime soon.

The company is looking at divestments of its Pokeno plant and a canning operation in Auckland to raise capital and reduce debt.

While other dairy companies are making money despite tough economic conditions, where did Synlait go wrong?

For one, they spent millions on investments and then realised that they won’t generate as much profitability per dollar of capital that they invested.

A case in point is the $70 million they ploughed in to fit out Pokeno to manufacture plant-based milk. No other milk processor in NZ thought it fit to make such an investment. Poor investment decisions are coming back to bite Synlait.

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