Dairy company Synlait has posted a strong first-half result driven by ingredients sales volumes, commodity price increases, and a one-time gain of $11.9 million from the sale and leaseback of property in Auckland.
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Key numbers for the six months ended January 2022 compared to a year ago:
- Net profit $27.9m vs $6.4m
- Revenue $790.6m vs $664.2m
- Other income including one-time gain $15.4m vs $1.6m
- Underlying profit $68.4m vs $47.7m
- Forecast base milk price $9.60 per kilo of milk solids
Synlait chair John Penno said the strong result reinforced the hard work undertaken to get the company back on track after a challenging 18 months.
The company said its first-half revenue and sales volume was the largest on record.
"Having been part of Synlait from the outset, I saw it as extremely important to help lead the company through its recent challenges and set it up for future success. While the job is not yet done, we have made some big steps in the right direction as we reset our leadership and rebuild our profitability and balance sheet," he said.
Chief executive Grant Watson said momentum was building at the company, which was a key supplier to infant milk formula company A2 Milk.
"Improving our systems, tools and processes will improve our ability to execute with excellence. This is a significant opportunity and will be our focus for the second half," he said.
Synlait said it expected its full-year profit to return to "robust profitability" based on factors including; tighter management of its ingredient business and improved infant base powder volumes.
However, the company said it did not expect profitability to grow at the same rate in the second half of the financial year due to Omicron, labour shortages and ongoing disruptions to global supply chains.
Dairy commodity prices was also continuing to rise due to global demand outrunning supply, it said.
"Planned reductions in inventory at Synlait and Dairyworks will generate operating cashflows in excess of earnings. These strong cashflows will enable Synlait to complete its capital expenditure programme and reduce debt to comfortable levels over the next two years," the company said.
