Synlait shares fall on missed profits

SYNLAIT Milk shares have retreated in early trade after the dairy producer revealed a below-expectation annual profit of $NZ82.2 million ($76.85 million).

The dual-listed firm lifted net profit for the 12 months to July 31 by 10 per cent after the 19-year-old company reported revenue of more than $NZ1 billion for the first time.

The revenue growth was spurred by a 21 per cent increase in sales of packaged infant formula, and a 15 per cent increase in sale of soft powders and creams. But profit missed analyst expectations, with Morgans’ Kurt Gelsomino having forecast a 17.5 per cent increase to $NZ87.6 million.

Synlait shares plunged as much as 11 per cent and, at 1130 AEST, were still 9.13 per cent lower at $8.26.

That’s down more than 30 per cent from $12 a year ago.

Synlait nonetheless issued strong volume guidance and said progress had been made on the commissioning of its Pokeno factory in Waikato,

flagged as key indicators by Mr Gelsomino.

“Synlait Pokeno remains on track, and we have welcomed 56 new milk suppliers to the company, representing a 20 per cent increase in our total milk collection in one year,” chair Graeme Milne wrote. “We do acknowledge that the covenant issue at Pokeno, which was disclosed during the year, has had a negative effect on our share price, and we are working to resolve the situation and limit its impact as soon as is practicable.”

Synlait paid farmers $6.58 a kilogram of milk solids, down from $6.78 a kilogram last financial year.

The company again refrained from paying a dividend.