Thursday, August 18, 2022

Synlait back on profitable track

Synlait has reported a good start to its two-year financial recovery plan, including a 300% increase in net profit after tax in the six months ended January 31.

Synlait’s interim results were presented by former chief executive John Penno and his successor Grant Watson (pictured).

Synlait has reported a good start to its two-year financial recovery plan, including a 300% increase in net profit after tax in the six months ended January 31.

The interim results were the first presentation as chair from co-founder and former chief executive John Penno, and the new CEO Grant Watson, only 10 weeks into the role.

Revenue was up 19% to $790.6 million and net profit jumped from $6.4m to $27.9m.

Directors also remain confident that the full-year results will deliver “robust profitability” and the recovery programme will enable completion of capital works and reduction of debt to comfortable levels.

“We have made some big steps in the right direction as we reset management and governance and rebuild our profitability and balance sheet,” Penno said.

Some $5m of the planned $7m of savings from the operational reset was delivered.

Net debt is down 19% to $392m, which Penno hailed as perhaps the biggest achievement of the reporting period.

Much-reduced sales of infant base powder to a2 Milk were replaced by higher volumes of milk powders, enabling Synlait to forecast a $9.60/kg milksolids farm gate price for the season.

“The turnaround in our Ingredients business and flexibility within our product mix has meant that very high dairy prices have had no impact on our ability to pay a competitive milk price,” he said.

The Pokeno plant fit-out to produce nutritional adult and paediatric plant-based products for the Asia Pacific region is on track and commercial production will start late in 2022.

Synlait’s share price has marked time during the past year between $3.20 and $3.80 as the senior appointments were made and the recovery strategy implemented.

Before the collapse of a2 infant base powder orders in mid-2020, Synlait was trading around $7 a share.

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