Synlait has posted a lower first half profit as it battles with a late drop off in expected customer demand due to the impacts of Covid-19.
Synlait's net profit for the six months to January fell 76 percent to $6.4m. Photo: RNZ / Alexander Robertson
The dairy company's net profit for the six months to January fell 76 percent to $6.4m.
"Our first half was challenging, and we continue to find ourselves in a period of significant uncertainty and volatility as Synlait faces into several headwinds," said Graeme Milne, Synlait chair.
A sudden drop in infant formula production at the end of 2020, based on lower demand for products from its customers, saw underlying earnings fall 29 percent.
However, revenue rose, with branded dairy products company Dairyworks benefiting from strong prices in global dairy auctions, and an increase in its market share in Australia.
Synlait chief executive Leon Clement said the company could not control Covid-19 but could control its response to the pandemic.
"Our focus is now to mitigate the impact Covid-19 has had on our customers, as we manage costs and capacity and pull forward value creation initiatives to accelerate the execution of our strategy."
The company warned the ongoing uncertainty around key customer The a2 Milk Company's expected demand for 2021 and 2022 meant it could not easily forecast what demand for consumer-packaged infant formula would look like.
Global shipping delays were also likely to continue and affect the full year result.
The company said its current outlook suggested a broadly break even result for the 2021 year, but there were a range of scenarios which would affect profitability.
"We will need time to get through this, but we remain confident about our future," Clement said.