Synlait back in black following refocusing
WELLINGTON: South Island dairy company Synlait Milk is back in the black as its ingredients division experienced higherthannormal sales, while its major customer rebalanced inventory levels.
Synlait chairman John Penno said the past year was ‘‘an important period of refocusing’’.
‘‘While rebuilding revenue, reducing unnecessary costs, releasing working capital, and decreasing capital expenditure, we have focused on building scale and capability in the highest returning segments available to the New Zealand dairy industry.
‘‘Our ingredients business returned to its historical profitability, and our nutritionals business returned to growth, while we continued to invest in customer development across all business units.’’
Synlait posted its largest loss in 202021 as it bore the cost of a sharp fall in orders for infant milk formula from major customer A2 Milk.
Inventory rebalancing from A2 Milk meant its product mix was still heavily weighted to its ingredients business in 202122, Synlait said.
Gross profit for its ingredients business was up $43 million to $57.5 million, while sales were up 5%.
Nutritionals sales volumes fell 2%, driven largely by A2 Milk adjusting its inventory levels.
But nutritionals gross profit was up by nearly twothirds to $70 million as it recovered manufacturing overheads at the same time it increased production of infant formula base powders.
Nutritionals margins also benefited from costcutting, the company said.
Chief executive Grant Watson said Synlait was well positioned as it entered the second year of its recovery.
‘‘Seeing the outcomes of our financial and strategic reviews come to fruition sooner than expected in the face of a challenging trading environment has been pleasing.
‘‘Continuing to strengthen our foundations over the next year will ensure we keep improving our financial performance for shareholders and continue making Synlait a great place to work for our team,’’ Mr Watson said. — RNZ