Specialty dairy company Synlait Milk has withdrawn its full-year 2021 guidance because of significant uncertainty and volatility within its business.
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It said the move was prompted by problems of its major customer, the a2 Milk Company, which recently reported a sharp slump in profit and scaled back its own outlook because of disruption to sales of infant formula to China.
"Given the significant volatility and uncertainty that is affecting Synlait at this time due to the above factors, the company's board and management see a broad range of outcomes still possible in FY21 [financial year 21]," it said in a statement to the NZX.
"However, the company's previous guidance, that the overall FY21 NPAT [net profit after tax] result will be approximately half that of the FY20 NPAT result, will now not be attainable."
It said in addition to uncertainty about a2 Milk's needs, the company was expecting a significant drop in infant formula powder production, and it was also feeling the effect of shipping delays.
In December Synlait updated it full 2021 guidance due to a revised demand forecast from A2. It was predicting then a 35 percent drop in infant formula volumes.
Synlait's share price slumped more than 12 percent at one stage, but it trimmed its losses to be about 7 percent lower.
The company will report its half year earnings at the end of March.
