Synlait's back
OPINION: After years of financial turmoil, Canterbury milk processor Synlait is now back in business.
Simon Robertson takes over from one of the company founders, John Penno, who stepped into the role last year as part of a plan to steer the listed processor back to profitability.
Robertson, who joined Synlait's board in 2020, is a professional company director. His new role will be ratified at Synlait's annual general meeting on December 2.
Synlait's AGM notice says Robertson has extensive commercial experience including 10 years with Auckland International Airport (AIAL), during a period of significant investment and strategic growth.
As the chief financial officer for AIAL he led the finance, accounting, business technology and procurement functions along with investor relations and regulatory affairs.
Synlait says Robertson has a proven track-record in strategyand capital-intensive infrastructure investment.
He is a director of Ballance Agri Nutrients, ITM, Apata Group, and previously served on the boards of Flick Energy and North Queensland Airports. He also chairs Synlait's audit & risk committee.
At Synlait's 2021 annual meeting, shareholders agreed to change the constitution to enable Penno, a board-appointed director, to become chair on a temporary basis.
The company says this was a temporary measure to guide Synlait’s new chief executive Grant Watson through his induction and establishment.
Penno also held the role of interim chief executive prior to Watson’s appointment.
Synlait reported a $28.5 million loss for FY2021, its first loss after nine years of profitability.
Penno then took charge and announced a plan to return to “robust profitability”.
Synlait’s woes began in December 2020 when a2 Milk suddenly reduced its demand for infant formula.
It typically produces 45% to 50% of its infant base powder during the shoulder. Inventories are held to produce fully finished consumer-packaged infant formula volumes as customer demand formalises in future months.
In the shoulder season of FY20, Synlait produced infant base powder inventories on a forward demand forecast that assumed ongoing growth of infant nutrition demand into FY21.
The company entered FY21 with large volumes of nutritionals powders on hand – 40% of forward demand with the expectation that demand would grow.
However, a2 Milk suddenly reduced demand resulting in an eventual 35% decline of nutritionals sales volumes, and a 67% decline in nutritionals powders production.
While a2 Milk’s infant formula downturn caused Synlait to underperform, a review revealed other inefficiencies within the business.
Meanwhile long-serving Synlait director Sam Knowles is retiring from the board next month. He joined the board in 2013.
Synlait says during Knowles’ tenure, the company has grown considerably.
“Sam joined Synlait just before its IPO and has made an invaluable contribution to its strategic direction and growth.
“Sam has also been chair of the people, environment and governance committee since 2019,” it says.
He will be replaced by former Fonterra executive Paul Washer.
Washer is currently chief financial officer for ASX-listed Pact Group.
Before this, he spent 17 years with Fonterra including a seven-month stint as acting chief financial officer.
