Synlait posts full-year loss, flags challenging conditions

The news: New Zealand dairy producer Synlait has swung to a full-year loss amid lower prices, inflation impacts and softening customer demand.

The numbers: The company posted a net loss of NZD4.3 million ($4 million) for the year to July 31, compared to a NZD38.5 million profit a year ago. Operating cashflow slumped 83% to NZD39 million while group revenue fell 3% to NZD1.6 billion.

The context: The dual-listed company’s weak result comes after what Synlait CEO Grant Watson called an “extremely challenging year” attributing it to factors like carbon dioxide shortages, extreme weather events, inflationary impacts and a material reduction in customer demand. This also comes amid worsening relations with major shareholder and partner A2 Milk, which this month cancelled Synlait’s exclusivity rights on supply of certain types of infant milk formula (IMF) products. Synlait shares are down nearly two-thirds this year.

Synlait warned it still faces challenging China market dynamics, softening global conditions more generally, and continued inflationary pressures across its cost base, which could impact the company's overall profitability.