Friday, July 8, 2022

My Daily Digest: March 30, 2021

Synlait hopes to break even in covid-hit market Synlait’s second-half downgrade shows just how reliant it and its customer a2 Milk are on the daigou channel for its sales into China.

After predicting a $75 million profit for this financial year at its outset, Synlait now expects to break even and is looking to keep costs under control to weather the headwinds.

The lack of international travel has hit sales of a2 Milk pretty hard and the other channels to market haven’t picked up any slack.

High farm gate milk prices are also having a negative effect on the balance sheet.

Back in January market analysts opined that the daigou trade was a great option for emerging businesses, but a mature outfit should perhaps be looking for a more direct path to consumers.

Synlait’s at the tail end of its investment phase, has an excellent sustainability model for its farmers and a great product.

Its leadership is confident it’ll emerge from this covid-induced coma better than ever.

It’ll need to, for its farmers and its shareholders.


Bryan Gibson


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