Synlait Milk Warns of Annual Profit Losses due to Rising Costs and Lower Margins
Synlait Milk, a leading New Zealand dairy company, has issued a warning regarding its annual profits. The company cited increased financing and operational costs, as well as lower ingredient and Advanced Nutrition margins, as the primary factors contributing to its projected first-half statutory loss.
According to Synlait, its earnings before interest, tax, depreciation, and amortization (Ebitda) for the 12 months ending in July are now expected to remain flat or possibly lower compared to the previous year. This comes as a deviation from the company’s earlier guidance in September, which had indicated a more positive outcome.
For the fiscal first half through January, Synlait anticipates reporting a net loss ranging between 17 million New Zealand dollars (US$10.4 million) and NZ$21 million. In contrast, during the same period in fiscal 2023, the company recorded a net profit of NZ$4.8 million.
In response to the challenging financial situation, Synlait stated that the board and management are actively prioritizing the need to address the company’s balance sheet by reducing leverage.
Investors and industry analysts are eagerly awaiting Synlait’s first-half results, which are set to be released in March.
Analyst comment
Negative
The market is likely to react negatively to this news as Synlait Milk warns of annual profit losses due to rising costs and lower margins. The projected first-half statutory loss and anticipated net loss for the fiscal first half indicate a challenging financial situation for the company. Investors and industry analysts will closely watch Synlait’s first-half results in March.
