22 Dec 2022

Synlait Milk confirms full-year underlying profit outlook

11:14 am on 22 December 2022
Serving fresh milk in a glass vase on a wooden table

Net debt and related interest costs were higher than forecast in the first half, Synlait said. Photo: 123RF

Synlait Milk has confirmed its full-year underlying profit outlook, but the half-year result has been hit by rising costs.

The company previously announced it expected underlying profit for the year ending July to be similar to 2021, which was s $37.3 million.

Delayed shipments of ingredient products resulted in about a 45 percent drop in sales volumes in the first four months of the financial year ending in July, but had since returned to near normal.

In addition to supply chain issues, Synlait Milk's investment in technology and inflation added to costs.

Those factors would result in net debt and related interest costs being higher than forecast in the first half due to the impact of delayed sales on cashflows, the company said.

Offsetting that was a significant exchange rate change over the year earlier helping the company's export earnings.

The company was diverting milk to produce products for the advanced nutrition and food service businesses, which attracted higher margins.

High commodity prices for cheese was helping the consumer business as it continued to expand in overseas markets, it said.