Synlait slumps despite return to profit
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More news: Shares in Synlait Milk are down 12% to 80.5 cents despite the New Zealand dairy producer swinging back to NZ$4.8 million profit in the first half, thanks to strong operational performance and continued cost control.
Investors, however, were unimpressed by the company's warning that financial progress in the second half will be slower as it balances several opportunities and risks related to milk stream returns and foreign exchange.
Synlait swings to $4.4m profit in first half
The news: New Zealand dairy producer Synlait has swung back to profit in the first half of this financial year, just months after securing a recapitalisation from major shareholders.
The numbers: The NZX and ASX-listed company reported a net profit of NZD4.8 million ($4.4 million) for the six months to 31 January, up from a net loss of NZD96.2 million a year ago. Earnings came in at NZD63.1 million, just above the guidance range announced in January, while revenue jumped 16% to NZD9.16.8 million.
The context: Synlait said the return to profitability was a considerable commercial achievement and attributed the result to strong operational performance and continued cost control. The company is targeting improvement in full-year earnings but said financial progress in the second half will be slower as it balances several opportunities and risks related to milk stream returns and foreign exchange. It is targeting a closing net debt balance between NZD250 million and NZD300 million and a senior debt to earnings ratio of 2.5x in FY25.
The embattled company last year secured a recapitalisation from major shareholders — China’s Bright Dairy and A2 Milk, along with bank debt refinancing, following a full-year loss amid heavy impairments.
The source: ASX
