Synlait posts annual profit of $38.5 million

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Photo: RNZ / Cosmo Kentish Barnes

South Island dairy company Synlait Milk is back in the black as its ingredients division saw above-normal sales while its main customer rebalanced stock levels.

Key figures for the 12 months ended July compared to a year ago:

  • Net profit $38.5 M against $28.5 M loss
  • Revenue $1.66 billion vs. $1.37 billion
  • Total average payout $9.59 vs. $7.82
  • Planned payment in 2023 of $9.50 per kg of milk solids

Synlait chairman John Penno said the past year has been “an important period of refocusing”.

“While rebuilding revenue, reducing unnecessary costs, freeing up working capital and decreasing capital expenditures, we have focused on building scale and capacity in the most profitable segments available to the company. New Zealand dairy industry.

“Our ingredients business returned to historic profitability and our nutrition business returned to growth, while we continued to invest in customer development across all business units.”

The company made a one-time gain of $11.9 million from the sale-leaseback of its land and building in Auckland.

Synlait recorded its biggest loss ever in 2020/21 as it bore the cost of a sharp drop in infant formula orders from its main customer A2 Milk.

A2 Milk’s inventory rebalancing meant its product range was still heavily weighted by its ingredients business in 2021/22, Synlait said.

Gross profit from its ingredients business rose $43 million to $57.5 million, while sales rose 5%.

Nutritional sales volumes fell 2%, mainly due to the adjustment of inventory levels at A2 Milk.

But nutrition’s gross profit rose nearly two-thirds to $70 million as it recouped manufacturing overhead while increasing production of infant formula base powders.

Nutrition margins also benefited from lower costs, the company said.

Managing director Grant Watson said Synlait was well positioned as it entered the second year of its takeover.

“Seeing the results of our financial and strategic reviews materialize earlier than expected in the face of a challenging business environment has been enjoyable.

“Continuing to strengthen our foundations over the next year will ensure that we continue to improve our financial performance for shareholders and continue to make Synlait a great place to work for our team,” Watson said.

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