Chair Simon Robertson says Synlait Milk is working to diversify its products, markets, and customers. (file image) Photo: RNZ
Dairy company Synlait Milk's profit has fallen 111 percent after a "highly challenging year" of easing demand, high inflation and extreme weather events.
The results come less than a week after A2 milk cancelled its exclusive supply agreement with Synlait, saying the supplier had fallen below delivery standards.
Key numbers for the 12 months ended July compared with a year ago:
- Net loss $4.3 million versus net profit $38.5m
- Revenue $1.60 billion versus $1.66bn
- Total average payment $8.49 per kilogram of milk solids (kgMS) versus $9.59 per kgMS
- Forecast 2024 payout $7 per kgMS
Synlait disputed that A2 Milk had the right to cancel the exclusivity arrangements but said the move was not expected to impact the company's 2024 financial results.
Chief executive Grant Watson said it had been an extremely challenging year.
"Various factors contributed to our poor financial performance, including material reductions in customer demand, CO2 shortages, extreme weather events, the Covid-19 pandemic, inflationary impacts on our cost base, and costs associated with the launch and stabilisation of our enterprise resource planning system," he said.
"Some factors were outside our control, and others were within our control."
Chair Simon Robertson said the results were "challenging and not where we need them to be", but the company was working to diversify its products, markets, and customers.
"Over the coming 12 months, we will address our balance sheet (through the intended divestment of Dairyworks and Temuka cheese assets); right size our cost base to current activities and near-term growth opportunities; deliver and build on our current and prospective advanced nutrition and foodservice customer opportunities; and lift our operational performance."
Final 2022/23 milk price
The company's final average base milk price for the 2022/23 season was $8.22 per kgMS.
In addition, an average of $0.27 per kgMS was paid for incentives, taking the total average milk payment to $8.49 per kgMS.
Synlait said the base milk price forecast for the 2023/24 season was unchanged at $7 per kgMS.
Outlook
The company warned of financial challenges ahead, with an uncertain outlook for the key https://www.rnz.co.nz/news/business/491840/chinese-demand-for-new-zealand-goods-more-subdued-than-hoped-economist Chinese market], softening global conditions and inflationary pressures across its cost base.
The company said it was confident in its strategy but would not provide financial guidance due to the uncertain broader macroeconomic factors.