Synlait posts half-year loss, warns on debt
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The news: Beaten-down shares in Synlait Milk have slipped further after the beleaguered New Zealand dairy producer posted a hefty half-year loss and warned it is facing material uncertainties with regard to its debt payments.
The numbers: The NZX and ASX-listed company reported a net loss of NZD96.2 million ($88.2 million) for the six months to 31 January 2024, despite lifting revenue by 3%. On an adjusted basis, net loss was NZD17.4 million, within the range it flagged in February.
Synlait shares, which are down by two-thirds in the last 12 months, fell another 2.2% to 66 cents in early trading on the ASX today.
Synlait said its results were mainly affected by three major non-cash writedowns, including against its North Island manufacturing facilities, Dairyworks assets and a change in the methodology to allocate inventory overheads.
However, it also reported a working capital deficit of NZD204.9 million, with repayments worth NZD514.1 million due in the next 12 months. The company last week renegotiated terms with its banking syndicate and obtained an extension for a NZD130 million loan repayment until 15 July.
The group has put its North Island facilities up for sale and also got the backing from top shareholder, China's Bright Dairy, which holds a 39% stake.
The context: The weak results come amid a slow recovery in business performance, the protracted Dairyworks sale process and worsening relations with top customer and major shareholder A2Milk over Synlait’s exclusivity rights on supply of certain types of infant milk formula products.
The sources: ASX announcement, ASX announcement
